Walgreens acquires Rite Aid for $17B

Walgreens Boots Alliance (NASDAQ:WBA) has entered into an agreement to buy Rite Aid for approximately $17.2 billion. Rite Aid operates 4,600 stores in 31 states, and the combined company will boast a network of nearly 13,000 U.S. locations.

"Today's announcement is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy," said Walgreens Boots Alliance CEO Stefano Pessina. "Our complementary retail pharmacy footprints in the United States 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. healthcare system.

"Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time."

Rite Aid is the third largest U.S. retail pharmacy chain, after CVS. The highly competitive pharmacy market has undergone dramatic changes since the implementation of the Affordable Care Act, opening the door to in-pharmacy care.

"The pharmacy consolidation endgame has begun," Adam Fein, president of Pembroke Consulting, told The New York Times. "Rite Aid was one of the last remaining pharmacy assets available for purchase."

In June, CVS acquired the pharmacies and clinics operated inside Target stores for $1.9 billion.

Rite Aid will initially continue to operate under its own banner, but changes will be made over time regarding how to merge the businesses. Walgreens acquired Duane Reade in 2010 and continues to operate the stores under a co-branded banner in the New York market. However, it's more likely that Rite Aid stores will take on the Walgreens brand as the Deerfield, Illinois-based retailer continues to build a global brand.

For more:
-See this Walgreens announcement
-See article in The New York Times

Related stories:
Walgreens offering up same-day delivery
Walgreens partners with health care provider for 25 in-store clinics
Walgreens opens flagship in Chicago's Wrigley Building
Walgreens' quarterly sales soar 6.5 percent
Walgreens denies reports of early takeover bid for Boots

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