According to reports, International pharmacy firm Walgreens Boots Alliance Inc (NASDAQ:WBA) has cancelled its plans to takeover US-based rival Rite Aid Corporation (NYSE:RAD).
As an alternative, Walgreens Boots Alliance Inc (NASDAQ:WBA) has agreed to acquire 2,186 Rite Aid stores and some distribution centers for reported $5.2 billion.
News of Walgreens Boots WBA acquiring Rite Aid was first revealed in October 2015. nevertheless, it faced battle from competition regulators as it would have seen a bind of the first and third largest US pharmacy chains.
“We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction,” said Walgreens chief executive Stefano Pessina in a statement.
“This new transaction extends our growth strategy and offers additional operational and financial benefits.”
Under the latest plan, Walgreens will take over about half of the almost 4,540 stores run by Rite Aid. And according to Rite Aid, most of the stores involved in the agreement are situated in the northeast, mid-Atlantic and southeast.
Meanwhile Walgreens will have to give out Rite Aid a $325m termination fee for cancelling the previous agreement. The firm also said it had scrapped a related agreement to sell 865 Rite Aid stores to pharmacy chain Fred’s.
Now Giant in Pharmacy Walgreens Boots Alliance was formed in 2014 when Alliance Boots merged with Walgreens. The company has a presence in more than 25 countries and employs more than 400,000 people.
Walgreens Boots Alliance (WBA) managed to snatch about $1.2bn in profit for the quarter ended in May. Just in the US it operates more than 8,000 stores . The statement released by the firm claims it expects the Rite Aid (RAD) purchase to add more than $400m in savings as it makes the network more efficient.
Furthermore the US Federal Trade Commission, which had scrutinized the last deal, said officials would evaluate the new plan.