Walgreens Buys Out Rite Aid
Drugstores have undergone an evolution over the past decade or so. It used to be that a drugstore, whether a local mom and pop shop or a national chain, served simply as a place to pick up prescriptions, beef up your first aid supplies, and maybe develop a roll of film or two. However, in a world increasingly concerned with convenience and instant gratification, large chain drugstores like Rite Aid, Walgreens, and CVS have morphed into one-stop shops focused on delivering everything from your prescription drugs and OTC medications to wellbeing products such as vitamins and supplements alongside beauty needs and even some grocery options.
At the fore of this change in the retail drugstore experience is Walgreens Boots Alliance, Inc., which formed last year when the Illinois-based Walgreens acquired the UK’s largest pharmacy chain, Alliance Boots. Operating over 13,000 stores in more than 11 countries, Walgreens Boots has recently completed negotiations with another large U.S. drugstore chain, Rite Aid Corporation, to acquire all outstanding stock in the company and merge the two over the next year.
The Agreement
According to the agreement, which was signed yesterday by both parties, Walgreens will buy out Rite Aid stock at $9 per share for a total of $17.2 billion. In doing so, Walgreens takes one more step towards its goal of global growth and creating a differentiated and personalized experience within the retail pharmacy sector underscored by increased access for the consumer.
While the details of the merger are already ironed out between the two pharmacy chains, the impact of this merger will take a while to hit the streets. The merger must pass through court approval, including anti-trust regulations, so that it will not likely conclude before the second half of 2016.
What Will Happen to Your Drugstore?
With the merger between Walgreens and Rite Aid, this new entity definitively stands as the nation’s largest retail drug chain. At first, stores will maintain their independent names (i.e. Rite Aid will still be Rite Aid) despite the change in ownership and there is no current plans to close any stores after the sale is complete.
Rather, Walgreens will strive to upgrade Rite Aid stores in order to position them as personalized health and wellbeing centers which meet a variety of consumers’ needs. In the official press release, which you can read in full, here, Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina, explains his hopes for the merger and the future of the retail pharmacy market space.
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.
So, for now, there is nothing new for Walgreens or Rite Aid (and their respective coupons and loyalty programs), but it is reasonable to expect that we will see changes coming down the pike in the next year or two.