FTC Says Walgreens Can Buy Stores -- WSJ
By Brent Kendall and Austen Hufford
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 20, 2017).
Walgreens Boots Alliance Inc. received regulatory approval to acquire nearly 2,000 stores from Rite Aid Corp., but only after the number of stores to be purchased in the deal was again trimmed to allay antitrust concerns.
Walgreens will now buy 1,932 Rite Aid stores for $4.38 billion, a far cry from the original $9.4 billion deal for about 4,600 stores struck in 2015.
Shares of Rite Aid were down 15% at $2.31 Tuesday afternoon. Walgreens was off 2% at $80.98.
Rite Aid will continue as a stand-alone company, operating about 2,600 stores, six distribution centers and its pharmacy-benefit manager, EnvisionRx. Its chief executive, John Standley, said on Tuesday the sale provides the company with a "more profitable store footprint" and stronger balance sheet as it engineers a turnaround.
The Federal Trade Commission spent roughly 18 months investigating the companies' broader plan to merge and harbored an array of concerns about the effect on competition. In the face of continued FTC objections, the two companies scrapped their merger plans in June, agreeing instead that Walgreens would settle for acquiring about 2,200 Rite Aid stores.
After further discussions with the FTC, the companies dropped about 250 more stores from the transaction, Rite Aid said Tuesday. Walgreens will gain stores located primarily in northeastern and southern U.S.
With those concessions, the FTC brought its review to a close and granted antitrust clearance for the deal, over the objections of a Democratic commissioner.