Tag:

Rite Aid...has now transferred 1,114 stores to Walgreens Boots Alliance as part of a larger deal with the nation’s largest pharmacy chain...In all, Walgreens will over the next few weeks buy 1,932 stores and three distribution centers from Rite Aid for nearly $4.4 billion in cash. Rite Aid...has received “cash proceeds of $2.424 billion, which the company continues to use to reduce debt.”...Before agreeing in September to buy 1,932 Rite Aids, Walgreens had been trying to buy all of Rite Aid before antitrust scrutiny from the Federal Trade Commission that ultimately led to the deal’s undoing...As a smaller pharmacy chain, Rite Aid is focusing on eight states largely on the East and West Coats with plans to invest heavily in its pharmacy benefit manager EnvisionRx, which works with employers and government health programs like Medicare to better control drug costs. PBMs are the middlemen between drug makers and patients when it comes to buying prescription drugs and getting discounts for their customers.

Wow. Walgreens Boots Alliance is acquiring Rite Aid. As I told The New York Times: “The pharmacy consolidation endgame has begun.”…Given the consumer angle, the deal has been widely covered.

Here are two significant news reports that outline the transaction’s high points:

• Walgreens to Buy Rite Aid for $9.4 Billion in The New York Times
• Walgreens, Rite Aid Unite to Create Drugstore Giant in The Wall Street Journal

..here are the surprisingly skimpy official company documents:

• Press release…
• Fiscal year end 2015 and 4Q earnings conference call (See page 19.)

The deal was not a total surprise. In April, I asked Will Walgreens Boots Alliance Buy Rite Aid?

1. WBA is doubling down on retail pharmacy.
2. Surprisingly, WBA is claiming that mega-scale with payers did not drive the deal.
3. Envision Rx is a learning opportunity, not a strategic driver.
4. The FTC will approve the deal.
5. The deal adds even more complexity and opacity to WBA.
6. It’s good for AmerisourceBergen, but horrible for McKesson.
7. Wholesaler outsourcing will make integration easier.
8. WBA will (probably) proceed with its ABC warrants.
9. All hail our global channels overlord.
10. Big deals beget more deals.

Late last week, Walgreens Boots Alliance filed an 8-K with the full text of its merger agreement with Rite Aid….The document containing the Agreement and Plan of Merger weighs in at a hefty 137 pages. Below, I highlight four fun facts about the deal’s timing, its termination fees, and what the companies will do to achieve antitrust approval.

1. The deal must be completed before Halloween 2016.
2. If Rite Aid backs out of the deal, then it owes as much as $370 million to Walgreens Boots Alliance.
3. WBA could owe Rite Aid a termination fee as large as $650 million.
4. To get the deal approved, WBA is willing to dump as many as 1,000 stores.

Two influential  senators called for close scrutiny of Walgreens Boots Alliance Inc's plan to buy Rite Aid Corp for $9.4 billion, a deal that would unite two of the three biggest U.S. drugstore chains...Walgreens Chief Executive Stefano Pessina said the company had analyzed the antitrust aspect of the deal but would not speculate on the number of drugstores it might need to divest in order to win regulatory approval...The top two antitrust lawmakers in the Senate...urged antitrust enforcers to give the plan careful scrutiny because of the importance of healthcare in the U.S. economy..."I have fought tirelessly to promote competition in the health sector and I believe the proposed merger of two of the three largest drug store chains in the country raises serious issues," Senator Amy Klobuchar...on the Senate Judiciary Committee's antitrust subcommittee...subcommittee's chair...Senator Mike Lee, said he hoped antitrust agencies would "closely scrutinize" the deal....

Walgreens Boots Alliance Inc.’s deal to acquire Rite Aid Corp. is expected to draw antitrust scrutiny not only because the company would grow to 12,700 locations, but because of what goes on behind the scenes with drug payments…Federal Trade Commission…will look closely at whether the merging of the No. 1 and No. 3 pharmacy chains in the U.S. will lead to higher prices for prescription drugs...the FTC will probably review the approximately $9.4 billion deal market-by-market instead of on a national basis, since CVS, Walgreens, Wal-Mart and Rite Aid together control only about half of the U.S. retail pharmacy market...The rest is held by independent stores, smaller chains and mail-order companies. Walgreens is likely to sell or shutter some stores...

Walgreens Boots Alliance Inc. agreed to acquire Rite Aid Corp. for about $9.4 billion in cash… The…deal…would combine the second- and third-largest drugstore chains in the U.S., with a total of about 12,800 locations, helping Walgreens vault past market leader CVS Health Corp. The acquisition will… will produce more than $1 billion in savings from cost overlaps…the deal is valued at $17.2 billion… Rite Aid shares fell 8.1 percent to $7.97 at 9:55 a.m. in New York, below Walgreens’ offer of $9 a share, reflecting speculation that the transaction will face antitrust scrutiny…Walgreens shares slumped 6.6 percent to $88.90. The deal creates financial savings but does little to change the drugstore chain’s strategic position in the rapidly evolving health-care industry…