In fact, Walgreens` plan to buy 2,186 Rite Aid stores achieves many of the same goals as the merger — including eliminating Rite Aid as a rival — but in a way that makes it harder for the FTC to bring the companies to court to stop the deal, the cartel experts said. Plans to merge Deerfield`s Walgreens with Rite Aid date back to October 2015. The proposal was delayed by more than a year after it was announced following the Federal Trade Commission`s (FTC) review of anti-dominant cartel issues. To allay the FTC`s fears, Walgreens agreed to sell 865 branches in the eastern and western United States to Fred`s Pharmacy. Other federal agencies have also worked with vacancies since the U.S. presidential election, resulting in an extended period of uncertainty for companies investigating mergers and obtaining other types of government approval. “This is an important moment for our company, and we are excited about the opportunities this agreement will offer our customers and patients, employees and investors,” said Stefano Pessina, executive vice president and CEO of Walgreens Boots Alliance. David Larsen, an analyst at Leerink Partners, estimated that Walgreens would pay $2.4 million per Rite Aid deal under the new deal, more than it would have paid under a previous deal, where it would have paid $2.04 million to $2.06 million per deal. DEERFIELD, Ill. (ots/IN) – The Walgreens-Rite Aid merger is back on track after receiving regulatory approval for the nearly $4.4 billion deal. In June, however, Walgreens rejected its initial $9.4 billion proposal to buy Rite Aid, and instead struck a new deal to buy nearly half of Rite Aid`s stores. At the time, Walgreens agreed to pay Rite Aid $5.16 billion in cash for 2,186 of its 4,153 stores, as well as a cancellation fee of $325 million. The $17.2 billion merger is expected to close in the second half of 2016.
The old contract was two years in production. Originally a $17 billion deal announced in October 2015, the deal was revised in December 2016 and scaled back in January 2017. Walgreens has also invited Rite Aid to join its bulk purchase agreement, which aims to use the combined weight of its members to negotiate discounts on generic prices. Walgreens said it expects about $400 million in cost savings from its new deal, compared to about $1 billion expected from the original deal. The amended and amended purchase agreement between the parties updates the terms of the agreement with Rite Aid announced in June. The Board of Directors of both companies has approved the transaction and remains subject to other customary closing conditions. The amended agreement replaces the previous purchase agreement reached by the two companies in June, which included 2,186 transactions and related assets for $5.175 billion in cash and other considerations. The aborted deal was a reminder that mergers that lead to high industry concentration could face challenges, even as more pro-business Republicans take the reins from Democrats in antitrust enforcement. The new deal will help Rite Aid address margin challenges at the pharmacy and significantly reduce debt, the company`s CEO John Standley said in a statement. Walgreens Boots Alliance Inc. and Rite Aid Corp.
have rejected their $9.4 billion merger deal, the latest in a series of high-profile deals that have been derailed by antitrust authorities. Walgreens will pay $325 million to Rite Aid to cancel the merger. But he expects in-store purchases to save more than $400 million over time. .