Walgreens To Buy Rival Rite Aid For $9.4B, Will Create Drugstore Giant

The deal, which Walgreens expects to complete in the second half of 2016, will likely draw regulatory antitrust scrutiny.

The New York Times' DealBook: Walgreens To Buy Rite Aid For $9.4 Billion

As companies throughout the universe of the health care industry accelerate the pace of consolidation, two of the country’s biggest drugstore chains have agreed to combine to create a new giant. Walgreens Boots Alliance said on Tuesday that it would buy Rite Aid for more than $9.4 billion in cash, significantly bolstering its influence with drug makers and pharmacy benefit managers. (de la Merced and Tabuchi, 10/27)

Los Angeles Times: Walgreens To Buy Rival Rite Aid For $9.4 Billion, Creating Drugstore Giant

The companies didn't say whether there would be store closures or layoffs after the deal closes. But they said “decisions will be made over time regarding the integration of the two companies” and that Walgreens “plans to further transform Rite Aid's stores to better meet consumer needs.” (Peltz and Masunaga, 10/27)

The Wall Street Journal: Walgreens, Rite Aid Unite To Create Drugstore Giant

The deal, which would unite two of the country’s three biggest drugstore owners, would be likely to draw scrutiny from antitrust regulators, who could demand divestitures in exchange for their approval. It also adds to a blockbuster year for health-care mergers and acquisitions, helping to put 2015 on track to be the busiest year ever for M&A. Including assumed debt, the transaction is valued at $17.2 billion. Rite Aid’s debt totaled $7.4 billion in August. (Mattioli , Siconolfi and Cimilluca, 10/27)

Reuters: Walgreens To Buy Rival Rite-Aid For $9.4B

Walgreens said it expects the transaction to close in the second half of 2016 and to boost its earnings per share in the first full year after its completion. Moreover, it sees cost savings of more than $1 billion from buying Rite-Aid, which will initially operate under its existing brand name. (Pierson, Iyer and Cavale, 10/28)

Meanwhile, a common drug plan fee is undermining some pharmacy profits -

The Wall Street Journal: Rising Fees Pinch Some Pharmacies

A sharp rise in fees associated with a popular type of drug plan is chipping away at pharmacies’ profits across the U.S. ... These fees, known as DIR for direct and indirect remuneration, are a small piece of the tangle of contracts, rebates and reimbursements involved in the sale of prescription drugs in the U.S., which totaled $374 billion in 2014, according to the IMS Institute for Healthcare Informatics, a research group. (Ziobro, 10/28)

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