Last Friday, Jan. 27, was the deadline for the deal to close in the proposed acquisition of drugstore chain Rite Aid by competitor Walgreens. Today, the companies announced a revised deal with an eye to meeting Federal Trade Commission approval. This deal values Rite Aid at over $2 billion less, and proposes the sale of hundreds more stores to another drugstore chain.
The two chains first proposed this deal back in October 2015, putting the value of Rite Aid and its stores at $9.4 billion. According to The Wall Street Journal, the new proposal lowers the purchase price of the chain, and the final value of the company ranges from $6.50 to $7 per share depending on how many stores Rite Aid divests, or sells to a competitor as a condition of the merger. The lower share price kicks in if the companies divest at least 1,200 stores.
Walgriteaid Merger 2.0 expires at the end of July, giving the FTC more time to evaluate the deal and the impact of an additional 335 divested stores. Even a total of 1,200 may not be enough, since the merger would create the country’s largest drugstore chain with over 10,000 stores.
Consolidating the two chains wouldn’t just affect consumers and give them fewer choices of places to shop: it would give the new, larger Walgreens a stronger bargaining position with both drug companies and pharmacy benefits managers, which decide how much health insurers will pay.
by Laura Northrup via Consumerist
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