Rite Aid To Sell Half Its Stores To Walgreens

Rite Aid To Sell Half Its Stores To Walgreens

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by: Jayson Derrick, Benzinga Staff Writer


Shares of Rite Aid Corporation RAD 27.74% lost nearly 20 percent Thursday morning after the retail drugstore chain confirmed a finalized asset purchase agreement with rival Walgreens Boots Alliance Inc WBA 0.4%.

Walgreens has attempted to acquire the entirety of Rite Aid since 2015, but instead Rite Aid will now sell 2,186 of its stores, related distribution assets and inventory for an all-cash purchase price of $5.175 billion. The stores are mostly located in the Northeast, Mid-Atlantic and Southeastern regions of the U.S..

The agreement gives Rite Aid the option to buy generic drugs that are sourced through an affiliate of Walgreens at cost for 10 years. In return, Rite Aid will provide certain transition services for up to three years after the transaction is expected to close within six months.

Since the transaction didn't end in a complete acquisition of Rite Aid, Walgreens will pay a termination fee of $325 million in cash.

The deal has already been approved by the board of directors of both companies and doesn't require a shareholder vote. The deal also remains subject to the appropriate regulatory and antitrust approvals.

"While we believe that pursuing the merger with WBA was the right thing to do for our investors and customers, this new agreement provides a clear path forward and positions Rite Aid as a strong, independent, multi-regional drugstore chain and pharmacy benefits manager with a compelling footprint in key markets," said Rite Aid Chairman and CEO John Standley. "The transaction offers clear solutions to assist us in addressing our pharmacy margin challenges and allows us to significantly reduce debt, resulting in a strong balance sheet and improved financial flexibility moving forward."


© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.


3 responses to “Rite Aid To Sell Half Its Stores To Walgreens”

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