Walgreens Boots Alliance Inc (NASDAQ:WBA) and Rite Aid Corporation’s (NYSE:RAD) disclosed that they have struck a definitive agreement. The latest deal replaces the earlier one struck in October 2015 and amended later in January this year. The deal envisages the former to acquire 2,186 stores, as well as, three distribution centers of the latter. The agreement included the related inventory too.
Walgreens Boots Alliance will pay $5.175 billion in cash to Rite Aid for this transaction. The company will also assume the related real estate leases, as well as, the grant of an option exercisable until May 2019. As part of the fresh transaction, the company would assume some restricted store-related liabilities.
The two companies earlier agreement struck in October 2015 and amended in January last besides the deal to sell some Rite Aid Stores to Fred’s announced in December last year stand terminated. As a result of the termination of merger deal, Walgreens Boots Alliance would pay $325 million to Rite Aid as the termination fee.
Walgreens Boots Alliance executive vice chairman and CEO, Stefano Pessina, reacted to say, “This new transaction extends our growth strategy and offers additional operational and financial benefits. It will allow us to expand and optimize our retail pharmacy network in key markets in the U.S., including the Northeast, and provide customers and patients with greater access to convenient, affordable care. We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction and will streamline and simplify the transition for customers, team members and other stakeholders.”
The company indicated that the transaction is subject to applicable waiting periods under the antitrust act. The company expects the initial closing of the fresh deal to happen in the next six-month period. Walgreens Boots sees the transaction to be accretive to its adjusted EPS modestly in the first full year after the initial closing. The company also sees more than $400 million synergies within three to four years of transaction closure.