Walgreens Boots Alliance has secured regulatory clearance for its amended agreement to purchase 1,932 stores, three distribution centers and related inventory from Rite Aid Corporation for $4.375 billion in cash and other considerations.
The amended deal updates and reduces the amount of stores from the agreement with Rite Aid announced in June 2017. The original deal was to include 2,186 stores and related assets for $5.175 billion in cash.
The transaction has been approved by the boards of directors of Rite Aid and Walgreens Boots Alliance and is still subject to other customary closing conditions. Store purchases are expected to begin in October, with completion anticipated in spring 2018.
The consideration for the transaction will now be $4.375 billion in cash, the assumption by Walgreens Boots of the related real estate leases and the grant of the option to Rite Aid, exercisable through May 2019, to become a member of Walgreens Boots Alliance’s group purchasing organization. Walgreens Boots Alliance will also assume certain limited store-related liabilities as part of the new transaction.
After the acquisition, the company said that the stores will be converted to the Walgreens brand in planned phases. The stores to be purchased are located primarily in the Northeast and Southern U.S., and the three distribution centers to be purchased are located in Dayville, CT, Philadelphia, and Spartanburg, SC. The transition of these distribution centers to Walgreens will not begin for at least 12 months.
“This is a significant moment for our company, and we are excited about the opportunities this agreement will deliver for our customers and patients, employees and investors,” said Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO “Combining Walgreens retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve enhanced, sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more local neighborhoods across the U.S. We are confident in the path ahead and look forward to working together to shape the future of health care and deliver on the full potential these stores bring to our network.”
“Securing regulatory clearance provides us with a clear path forward to realize the benefits of this transaction. With a compelling and more profitable store footprint in key markets, enhanced purchasing capabilities and a stronger balance sheet and improved financial flexibility, we are well positioned to implement our plans to deliver improved results,” said John Standley, Rite Aid Chairman and CEO.