Last Updated on 02/27/2021 by GS Staff
Q: Does Walgreens own Rite Aid?
No, Walgreens does not own Rite Aid. The company tried to acquire Rite Aid in 2015 for $9.4 billion. It would have united two of the top three drugstore chains in the United States. However, antitrust regulators had major concerns over the deal, which delayed the closing. One of the major concerns, according to the Wall Street Journal, was that the combined Walgreens/Rite Aid “would be able to bully pharmacy-benefit managers steering corporate and government drug plans”.
In order to ease the concerns of regulators, the companies tried to sell 865 stores to the now-bankrupt Fred’s for $950 million. Fred’s had approximately 650 stores at the time, so the addition of 865 stores would have been significant. With only $5.7 million in cash, Fred’s was approved to borrow $1.65 billion to fund the purchase. Unfortunately, they wouldn’t need the loan.
Before regulators made a decision on Walgreen’s acquisition of Rite Aid, the companies decide on another deal. Walgreens ended up buying 1,932 stores and three distribution centers from Rite Aid for $4.4 billion in cash. Rite Aid claimed that the acquisition deal would have likely been turned down by the Federal Trade Commission, which is why they agreed to the new deal.
Interestingly, the grocery giant Albertsons and Rite Aid attempted to merge in 2018 after the Walgreens/Rite Aid saga ended. The companies canceled the merger agreement shortly before shareholders voted on the deal. Ultimately, there was strong opposition from Rite Aid shareholders to reject the deal since they were not offered a premium or fair offer for their shares.
Today, Rite Aid has a market cap of around $1.08 billion. This is a fraction of the $9 billion that Walgreens was willing to pay for the entire company approximately five years ago.
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Walgreens & Rite Aid – Separate Companies
Walgreens and Rite Aid did attempt to unite as discussed above, but they are currently two separate publicly traded companies.
Walgreens trades under the stock symbol WBA. It has over 9,000 drugstores that are located in all 50 states, Washington D.C., Puerto Rico, and U.S. Virgin Islands. In 2014, Walgreens acquired Alliance Boots, a European health and beauty retailer, and pharmaceutical wholesaler and distributor. This greatly expanded Walgreens internationally. The annual revenue of Walgreens Boots Alliance was $139.54 billion for FY 2020.
Rite Aid trades under the stock symbol RAD. The company has approximately 2,500 stores in 19 states. A strong concentration of these stores is on both U.S. coasts. Rite Aid had annual revenue of approximately $21.9 billion as of February 2020.