Walgreens Merger Case Study

No Deal: Walgreens Cancels Billion Dollar Merger with Rite Aid

Following years of negotiations, Walgreens Boots Alliance has announced that it will no longer be buying Rite Aid Corporation, only days before the Federal Trade Commission was set to rule on the merger. The drugstore giants were hoping that antitrust regulations under President Trump and the new administration would promise easier rulings; however, upon hearing of the major concerns voiced by regulators, it led WAB and RAD to believe that the F.T.C. would not approve the billion dollar merger. Rite Aid Corporation was founded back in 1962 by Alex Grass, when he opened up the first store in Scranton, Pennsylvania under the name Thrift D Discount Center. Following several

In December of 2016 the merger was reworked and scaled back in January 2017 when the two parties agreed on a $10 billion mega-merger instead. The merger deadline was set for July 7th, when the federal trade commission would rule the deal between the two companies as approved or denied. However, as the deadline approached, Walgreens announced that it would no longer be buying Rite Aid. The merger aroused questions on antitrust laws regulated by the FTC with concerns of a monopoly as the buyout would have left the U.S. with just two main pharmacy chains Walgreens and CVS. Alternatively, Walgreens has now announced that in replacement of the original deal to buy Rite Aid wholly, it will now purchase 2,186 Rite Aid stores for $5.2 billion, effectively taking half of Rite Aid’s stores leaving it with just 2,350 retail establishments across the nation. Walgreens states that the Rite Aid stores will ultimately be rebranded as Walgreens stores with the goal to be completed within six months. However, the new Walgreens proposal to buy half of Rite Aid’s stores must once again seek and gain approval for this deal from the FTC which could deter their six month goal as far as extending the timeline to 3 years for the 2,350 stores to become Walgreens establishments. Walgreens says its expects the store purchases to eventually save the company more than $400 million over time, more than its previous deal of buying Rite Aid altogether. Fortunately for Rite Aid, Walgreens has paid a fee of $325 million to Rite Aid for cancelling the merger deal just before the