Walgreens Boots Alliance is in “advanced talks” to buy rival drugstore Rite Aid in a deal that may be valued as high as $10 billion, according to a report from The Wall Street Journal (WSJ). Sources cited in the WSJ expect the companies to announce the deal October 28.
Officials at Walgreens and Rite Aid have not yet commented on the negotiations. Upon stock closing, Rite Aid shares surged more than 40% to $8.70 in trading, while Walgreens stock climbed more than 5% to $95.16.
Given the sizes of both pharmacies, the deal could draw scrutiny from antitrust regulators, according to the report. Walgreens has approximately 8,200 U.S. stores, making it the largest pharmacy chain in the country. Rite Aid has approximately 4,600 drug stores nationwide, qualifying it as the third-largest.
Advertisement
Both companies have made acquisitions over the past year that bolstered their reach throughout the industry and expanded their offerings. To close out 2014, Walgreens fully acquired the remaining 55% of European pharmacy chain Alliance Boots Gmbh to form the present Walgreens Boots Alliance. In February 2015, Rite Aid acquired EnvisionRx, a full-service pharmacy benefit management company, for $2 billion.
Consolidation has been a major theme pervading throughout the retail healthcare sector in recent months. In August, CVS Health acquired pharmacy services provider Omnicare for $12.9 billion. Major healthcare insurance providers also are undergoing massive consolidation. If regulators approve the deals, the amount of major U.S. healthcare insurers would shrink from five to three. Aetna Inc. agreed to buy Humana Inc. for $34 billion in July, while Anthem Inc. agreed to buy Cigna Corp. for $48 billion later that month.
