Walgreens' revised deal to buy Rite Aid stores gets OK

Rite Aid keeping more than half its stores

NEW YORK - Walgreens has finally figured out a way to buy Rite Aid -- or about half of it, at least.

The pharmacy giant said Tuesday that federal regulators have accepted its $4.375 billion deal to buy 1,932 Rite Aid stores, three distribution centers and related inventory.

"Combining Walgreens' retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve enhanced, sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more local neighborhoods across the United States," said Stefano Pessina, Walgreens' executive vice chairman and CEO.

Both stores have a presence in the Reading area, with Rite Aid having more than a dozen locations in Berks County.

Walgreens opening its first Berks store in Cumru Township in 2014. A second Walgreens was built in Muhlenberg Township, but the company dropped its plans to open there.

The Rite Aid stores being bought by Walgreens are primarily located in the northeastern and southern regions of the United States. One of the three distribution centers is located in Philadelphia.

The deal will leave Rite Aid, headquartered near Camp Hill, Pennsylvania, with about 2,600 stores and six distribution centers.

"With a compelling and more profitable store footprint in key markets, enhanced purchasing capabilities and a stronger balance sheet and improved financial flexibility, we are well positioned to implement our plans to deliver improved results," said John Standley, Rite Aid's chairman and CEO.

The purchase marks the end of a two-year fight for Walgreens, which initially tried to buy Rite Aid outright for $17 billion in October 2015.

The merger agreement faced intense scrutiny from the start, since it would have left the United States with just two major pharmacy chains: Walgreens and CVS.

The agreement was reworked several times over the past few years as Walgreens scaled back the number of stores it intended to purchase. In June, the company tried for a $5.2 billion deal that would have handed it 2,186 Rite Aid stores.

Walgreens recently revised its deal again, said company spokesman Michael Polzin. Polzin said that the waiting period for review by the Federal Trade Commission expired last night at midnight, effectively giving Walgreens the regulatory clearance it needs to move forward.

The Rite Aid pharmacies that Walgreens plans to buy will eventually be rebranded as Walgreens stores. But it won't happen all at once.

Polzin said the company will begin buying Rite Aids in October, adding that it expects to finish doing so in the spring of 2018.

Rite Aid stock was down nearly 7% in premarket trading Tuesday morning -- a change from Monday, when it rose as investors hoped for a better deal.

Walgreens stock, meanwhile, was up 2% Tuesday before open.

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