Walgreens Boots Alliance (Deerfield, Ill.), which operates the chain of drugstores, announced plans to purchase rival Rite Aid Corp. (Camp Hill, Penn.) for $17.2 billion. Walgreens does not expect, initially, to change the name of Rite Aid stores.
Subject to regulatory approval, this deal would result in the drugstore industry being owned by two major companies: Walgreens and CVS Health (Woonsocket, R.I.). CVS has 58 percent market share in the pharmacy and drug store business. Walgreens and Rite Aid are the second and third largest drugstore operators at 31 and 10 percent, respectively.
Walgreens is reportedly offering to pay $9 per share in cash in a valuation of the company that includes the assumption of debt, reports USA Today. That amount is 48 percent above Rite Aid’s valuation at the close of trading on Monday. If the deal goes through, it is anticipated to save Walgreens more than $1 billion through combined purchasing power and cost cuts.