The $9.4 billion deal will give the merged company 13,000 U.S. stores, as compared to CVS, with 7,800 stores. Analysts say the move is another sign of the efforts by many companies at consolidation in the fast-changing health care market. The deal will still have to pass an antitrust review before being finalized.
Walgreens agreed to pay $9 cash per share of Rite Aid stock, offering a 48 percent premium to Rite Aid’s closing price on Monday. On Tuesday, when the Wall Street Journal reported on the planned merger, Rite Aid’s stock rose 43 percent to $8.67. Walgreens shares rose 6.4 percent to $95.16 a share.
When Walgreens made the announcement today, they said Rite Aid stores would be allowed to keep their names, “initially.” but the new company expects to create “a fully harmonized portfolio of stores” over time, according to WTVR.
The year has been a “blockbuster” year for mergers and acquisitions across the health care industry, putting 2015 on track to become the busiest year ever for M & A. Drug makers, hospital chains, health insurers, and others have created merger deals valued at over $247 billion. The Affordable Care Act and other factors are behind the M&A’s, as companies seek more leverage with suppliers and try to cut costs.
Walgreens and CVS both have market capitalizations in excess of $100 billion, where the much smaller Rite Aid had revenues of $26.5 billion at the end of their fiscal year in February. Walgreens took over New York-based drugstore chain Duane Reade in 2010, and Boots Alliance, a European pharmacy chain, in 2014.
