Walgreens seals deal to buy smaller drugstore rival Rite-Aid

Walgreens is buying buy rival Rite Aid for about $9.41 billion in cash, creating a drugstore giant with almost 18,000 stores around the world. Rite Aid stores that now share the same territory with Walgreens outlets, for example, could be put on the chopping block as the expanded company looks to cut costs.

“The combination of Walgreens and Rite Aid creates a further opportunity to deliver a high-quality retail pharmacy choice for US consumers in an evolving and increasingly personalized healthcare environment”, Walgreens said in a news release. Walgreens took over New York-based drugstore chain Duane Reade in 2010, and Boots Alliance, a European pharmacy chain, in 2014. The purchase is expected to be finalized in the second quarter and is likely to be accretive to Walgreens’ earnings in the first year after completion. The proposed transaction is valued at approximately $17.2 billion.

Still, Rite Aid stock is very cheap, and for this reason it might be in high demand now that WBA is reportedly close to an acquisition.

CNN reports Rite Aid stores will still keep their names, at least for a little while.

Rite Aid and Walgreens both have multiple stores in Berks County and the Lehigh Valley.

Rite Aid spokesperson Ashley Flower, responding to a call with an email, declined to comment, citing the company’s long-standing policy against discussing “market rumors or speculation”.

With that said, this is a deal that I predicted back in March, and one that many have speculated about over the previous year.

“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 in a statement. Rite Aid entered that business by acquiring Envision Pharmaceutical Services for about $2 billion this year.

What About Rite Aid Stock?