Walgreens Boots Alliance, the wellness and drug marketing giant led by Stefano Pessina, and pharmacy chain Rite Aid scuppered a planned $9,4 billion merger announced in 2015. The closing, initially expected for last October , was first postponed to the end of January this year and then again until today's announcement. The two companies have instead reached an alternative agreement, under which Walgreens will buy 2.186 Rite Aid pharmacies, 48 percent of its 4.523 total, three distribution centers and related inventories for $5,175 billion in cash. .
The concerns of investors have therefore materialized, who feared that the union would collapse after the problems raised by the regulatory authorities: already at the announcement of the merger, the Federal Trade Commission (FTC), the American federal agency supervising trade and for consumer protection, he had asked for part of the pharmacies to be sold, to avoid a concentration of power.
In December 2016, an agreement had been reached to sell almost 900 of them, bought by the regional retail chain Fred's. The new transaction announced today, as mentioned, replaces the merger and also blows up the agreement on the sale of the pharmacies to Fred's, which is why the latter's stock loses more than 20% in the pre-market on Wall Street. Walgreens to pay $325 million in penalty for failing to merge and sell to Fred's.
“The new transaction resolves previously raised competitive concerns and streamlines and simplifies the operation, in the best interests of customers, team members and shareholders,” Pessina said. Walgreens will buy the Rite Aid stores and related assets within six months, after the go-ahead from regulators, and subsequently rebrand.
The company expects the transaction to have a “modestly positive” impact on adjusted earnings per share in the first full year after the initial closing and believes that the total synergies will total $400 million and be fully realized within three to four years.
