Walgreens buys Rite Aid for $17.2B

Walgreens Boots Alliance Inc. announced Oct. 27 it acquired competitor pharmacy chain Rite Aid Corp. for $17.2 billion, or $9 per share, including acquired net debt.

The all-cash transaction is expected to close in the second half of 2016. As part of the purchase, Rite Aid will be a wholly owned subsidiary of Walgreens and is expected to continue operating in the short term under its existing brand name.

Deerfield, Illinois-based Walgreens Boots Alliance operates more than 13,100 stores under the Walgreens, Duane Reade and Boots and Alliance Healthcare retail brands. Rite Aid, based in Camp Hill, Pennsylvania, currently operates eight stores in Westchester County. Walgreens operates 15.

Walgreens Boots Aliiance Executive Vice Chairman and CEO Stefano Pessina said the move will help with “realizing synergies over time.” He added the acquisition will create a stronger base for growth into the Rite Aid stores.

“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,” Pessina said. “Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy.”

Walgreens will finance the sale through existing cash as well as assumption of existing Rite Aid debt and issuance of new debt. Citigroup served as Rite Aid’s financial adviser, while UBS Investment Bank represented Walgreens in the deal.

Walgreens purchased pharmacy chain Duane Reade for $1.1 billion in 2010.

Rite Aid Chairman and CEO John Standley said the acquisition will help the company expand its opportunities through increased capital.

“Joining together with Walgreens Boots Alliance will enhance our ability to meet the health and wellness needs of Rite Aid’s customers while also delivering significant value to our shareholders,” Standley said.