Walgreens Boots Alliance and Rite Aid have entered an agreement to divest 865 Rite Aid stores and certain assets to Fred’s Pharmacy for $950m.
In addition to customary closing conditions, the all-cash transaction is subject to US Federal Trade Commission (FTC) approval, and the approval and completion of the pending acquisition of Rite Aid by Walgreens.
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The agreement is being entered into in response to concerns identified by the FTC in its review of the proposed acquisition of Rite Aid by Walgreens Boots Alliance, which was announced last October.
Walgreens Boots Alliance is actively engaged in discussions with the FTC regarding the transaction and is working towards completing the Rite Aid acquisition by early next year.
Walgreens Boots Alliance executive vice-chairman and chief executive officer Stefano Pessina said: “With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid.
"We look forward to continuing to provide our customers and patients with the highest level of care and attention.”
Upon completion of the transaction, Fred's expects to retain all store associates, as well as certain field and regional employees of the acquired stores.
During a transition period, the firm will continue to operate them under the Rite Aid banner.
It is expected that Walgreens will realise synergies in excess of $1bn from the Rite Aid acquisition to be fully realised within three to four years of closing of the merger.
These synergies are to be obtained from procurement, cost savings and other operations.
