Walgreens Boots To Acquire Rite Aid In $17.2 Billion Deal

Walgreens Boots Alliance and Rite Aid Corp. have entered into a definitive agreement under which Walgreens Boots Alliance will acquire all outstanding shares of Rite Aid for $9 per share in cash. According to the companies, the combination will further the Walgreens Boots Alliance strategy to provide a differentiated in-store experience for health, wellness and beauty for customers in the United States and globally.

The merger also will bring Rite Aid customers that same experience, one the retailer has labored to establish in its own right, the companies related in a merger statement. After the acquisition closes, Walgreens Boots Alliance said it will further transform Rite Aid stores to better meet consumer needs.

The companies put the total enterprise value of the acquisition at $17.2 billion, including acquired net debt.

Both company boards have approved the transaction, which is subject to approval by the holders of Rite Aid’s common stock, the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions. The transaction is expected to close in the second half of 2016.

Walgreens Boots Alliance determined that the transaction will be accretive to earnings per share in its first full year after completion and generate synergies in excess of $1 billion, according to the statement. Upon completion of the merger, Rite Aid will operate as a wholly owned subsidiary of Walgreens Boots Alliance, initially operating under its existing brand name. Integration of the two companies, they maintained, will proceed in the future and create a harmonized portfolio of stores and infrastructure.

“Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy,” said Walgreens Boots Alliance executive vice chairman and CEO, Stefano Pessina. “ In both mature and newer markets across the world, our approach is to advance and broaden the delivery of retail health, wellbeing and beauty products and services. This combination will further strengthen our commitment to making quality health care accessible to more customers and patients. Our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online. Walgreens Boots Alliance will provide to Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care and to offer innovative solutions for providers, payers and other entities in the U.S. health care system. Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time.”

Walgreens Boots Alliance resulted from the combination of Walgreens and European drug store chain Alliance Boots in December 2014. The acquisition of Rite Aid follows other recent retail consolidation moves, such as the purchase of Family Dollar by Dollar Tree in the dollar store sector and the announcement of a merger agreement between Staples and Office Depot in the office superstore channel.

Walgreens Boots Alliance operates over 13,100 stores in 11 countries, with about 8,240 drug stores in 50 states. Rite Aid operates nearly 4,600 stores in 31 states.