"While we believe that pursuing the merger with was the right thing to do for our investors and customers, this new agreement provides a clear path forward and positions Rite Aid as a strong, independent, multi-regional drugstore chain and pharmacy benefits manager with a compelling footprint in key markets," Rite Aid CEO John Standley said in a statement. Rite Aid added that it will provide certain transition services to Walgreens for up to three years after the deal closes. The deal also includes three Rite Aid distribution centers located in Connecticut, Philadelphia and South Carolina. as of May, said the stores included in the Walgreens deal are primarily located in the Northeast, mid-Atlantic and Southeast. Rite Aid, which had nearly 4,600 stores in the U.S. The larger drugstore chain will also pay Rite Aid a $325 million termination fee. Walgreens said it expects the initial closing of the deal to happen within six months, and then it will begin buying the 2,186 Rite Aid stores and convert them to Walgreens. "I think the Amazon threat is overstated because it's hard to get into the drug business." Other analysts are predicting Amazon - which just announced its plans to acquire grocery chain Whole Foods - will make moves into pharmacy operations in the future.īut retail analyst Ransom said he isn't sold on that idea, yet. "Teaming up with an Uber" could be one way to go, Ransom said.Įven Walgreens CEO Pessina said Thursday that it continues to be a "challenging market for pharmacy," with those challenges continuing and possibly intensifying in the months and years to come. "I think the drug stores are going to be dragged kicking and screaming into doing some sort of home delivery," the analyst told CNBC. "It will allow us to expand and optimize our retail pharmacy network in key markets in the U.S." Fred's CEO Michael Bloom said in a statement Thursday that "this is a disappointing outcome." Though, he added that the termination of the transaction between Walgreens and Rite Aid has no impact on Fred's "transformation strategy" or "ability to execute." Walgreens had initially offered to buy Rite Aid for $9.5 billion in late 2015, but the chain struggled to gain approval as federal regulators worried that a merger between the two would lead to a monopoly of sorts. "We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction," Pessina said in a statement Thursday. Rite Aid's shares tumbled 17 percent, to $3.24, while Walgreens' shares were up about 4.4 percent, at $80.51, after the announcement. Walgreens has also terminated a related deal to sell 865 Rite Aid stores to Fred's, which sent Fred's shares plunging 27 percent in premarket trading Thursday. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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