Walgreens will merge with the pharmaceutical giant as part of a deal that will net it 42% of Rite Aid for $4.38 billion, which is a slimmed-down version of the original deal. Paring down the deal was necessary to clear regulatory hurdles that were examining antitrust considerations when reviewing the move.
The move will net Walgreens 1,932 Rite Aid Stores, which is 254 less than what the company had announced it would be acquiring in July. The stores are being purchased in areas where competition between the two chains is not significant, avoiding antitrust issues.
The original deal saw Walgreens seeking to expand in the U.S. back in October 2015, when it sought to acquire all 4,600 Rite Aid stores in operation at the time. The company was looking to shell out $9.4 billion, but regulators did not clear the move, prompting Walgreens to adjust the terms of the agreement.
The deal could benefit consumers as it gives Rite Aid the opportunity to negotiate discounts on generic drugs as part of an initiative from Walgreens. Rite Aid’s three distribution centers in Pennsylvania, Connecticut and South Carolina may also be acquired by Walgreens as part of the deal.
RAD shares plummeted 9.7% Tuesday, while WBA shares fell 1.1%.