Walgreens scraps Rite Aid deal, to buy some stores instead.
Drugstore chain Walgreens Boots Alliance on Thursday called off its deal to buy Rite Aid after struggling to win antitrust approval.
Instead, Walgreens will acquire nearly half of the smaller rival’s US stores for US$5.18 billion in cash, something Walgreens CEO Stefano Pessina told analysts and investors is “more attractive than the transaction it replaces.” Notably, Walgreens won’t assume any debt from Rite Aid in this deal.
Walgreens has also terminated a related deal to sell 865 Rite Aid stores to Fred’s, which sent Fred’s shares plunging 27% in premarket trading Thursday.
Rite Aid’s shares tumbled 17%, to US$3.24, while Walgreens’ shares were up about 4.4%, at US$80.51, after the announcement.
“We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction,” Pessina said in a statement Thursday. “It will allow us to expand and optimize our retail pharmacy network in key markets in the US.”
Fred’s CEO Michael Bloom said in a statement Thursday that “this is a disappointing outcome.” Though, he added that the termination of the transaction between Walgreens and Rite Aid has no impact on Fred’s “transformation strategy” or “ability to execute.”
Full Content: Financial Times
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