NEW YORK (AP) — Walgreens has ended its takeover pursuit of rival Rite Aid following resistance from U.S. regulators and will instead now buy stores, distribution centers and inventory in a new deal.
The proposed merger, first announced in 2015, was initially for about $9.4 billion but was whittled down to about $6.8 billion earlier this year.
For scrapping the transaction, Walgreens Boots Alliance will pay Rite Aid Corp. a $325 million termination fee. It will pay Fred’s Pharmacy an additional $25 million following the termination of a related asset deal.
Under the new agreement, Walgreens will buy 2,186 stores, three distribution centers and related inventory from Rite Aid for approximately $5.18 billion in cash. Walgreens will also assume the related real estate leases and certain limited store-related liabilities. Rite Aid will have an option, exercisable through May 2019, to become a member of Walgreen’s group purchasing organization.
Walgreens said Thursday that the stores it purchases from Rite Aid will be converted to the Walgreens brand “over time.” The stores included in the agreement are mostly located in the Northeast, Mid-Atlantic and Southeast. The three distribution centers are in Dayville, Connecticut, Philadelphia and Spartanburg, South Carolina.
The new transaction is targeted to close within the next six months.
Prior to the new deal, Deerfield, Illinois-based Walgreens and Camp Hill, Pennsylvania-based Rite Aid faced a complicated task of easing antitrust concerns to complete the buyout. The companies…
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