Boots owners to snap up United States rival for $17.2 bn

That combination created Walgreens Boots Alliance Inc., which operates more than 13,100 stores in 11 countries.

The deal would unite two of the nation’s four largest drugstore chains, in a field that also includes CVS and Wal-Mart.

USA Today reported that Walgreens expects to save more than $1 billion in the form of combined purchasing power and cuts in costs after acquiring Rite Aid.

Walgreens paid Rite Aid $9 a share in cash, which is a 48 percent premium over the drugstore chain’s closing price in the stock exchange on Monday. Citigroup served as Rite Aid’s financial adviser, while UBS Investment Bank represented Walgreens in the deal.

The companies said that this deal was going to be worth $ 17.2 billion including debt. Consolidation gives the drug-store companies more leverage to negotiate with drug companies.

The transaction will add to Walgreens’ earnings after the deal has been complete for a full year, the companies said Tuesday in a statement.

Parent company Walgreens Boots Alliance says the acquistion of Rite Aid will create “the opportunity to deliver a high-quality retail pharmacy choice for US consumers in an evolving and increasingly personalized healthcare environment”.

Shares of the top USA drugstore, CVS (NYSE:CVS), lost 1.4% during the regular session. But they said “decisions will be made over time regarding the integration of the two companies” and that Walgreens “plans to further transform Rite Aid’s stores to better meet consumer needs”.

Healthcare deal-making hit a record of $392.4 billion in 2014 and has already surpassed that this year, reaching $447.5 billion as of September 10, according to Thomson Reuters data.

Walgreens Boots Aliiance Executive Vice Chairman and CEO Stefano Pessina said the move will help with “realizing synergies over time”. Rite Aid, based in Camp Hill, Pa., had sales of $26.5 billion in the year ended February 28. Pessina has replaced Walgreens management in Deerfield with his Alliance Boots team.

They also may see more clinics in Rite Aid Corp. stores and more products like vitamins and supplements aimed at keeping them healthy, as the sector continues to stretch well beyond simply filling prescriptions. Along with improving the presence of Walgreen it will also boost the drug chains ability to fend off rivals like online pharmacies and Wal-Mart Stores Inc.

“Other benefits could be derived from marrying Walgreens’ wholesale operation with Rite Aid”.