Walgreens Announces It Will Buy Rite Aid Chain

By Christine Kern, contributing writer

Merger creates a new drugstore giant in effort to bulk up healthcare.

Walgreens Boots Alliance Inc. has announced plans to buy drugstore chain Rite Aid, according to the Wall Street Journal.  The $17.2 billion acquisition would allow Rite Aid store to retain their name, at least initially, but Walgreens announced that it ultimately plans to create “a fully harmonized portfolio of stores,” according to a company statement. The move also means that Walgreens would control 13,000 U.S. stores, outnumbering its competitor CVS which runs 7,800 locations, CNN reported. 

The deal has to pass antitrust review in order to be completed, and at least one industry analyst expressed pessimism that the deal would be approved, since Rite Aid is the third-largest chain in the drugstore marketplace dominated by CVS and Walgreens, according to CNN. 

Meanwhile, antitrust lawyer David Balto, a former FTC official, told Reuters that the Walgreens-Rite-Aid deal would receive careful scrutiny by U.S. regulators and then probably be approved. “Drugstore services have evolved substantially in the past several years," he said, "and the market is becoming robustly competitive, with substantial competition from supermarkets and mass merchants."

In a company statement, Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina asserted, “This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients. 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. Walgreens Boots Alliance will provide to Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care, and to offer innovative solutions for providers, payers and other entities in the U.S. healthcare system. Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time.”

Rite Aid CEO and Chairman John Standley also see the move as a way to expand consumer access, stating:  “This transaction is a testament to the hard work of all our associates to deliver a higher level of care to the patients and communities we serve. Together with Walgreens Boots Alliance, the Rite Aid team can continue to build upon this great work through access to increased capital that will enhance our store base and expand opportunities as part of the first global pharmacy-led, health and wellbeing enterprise.”