Walgreens slashes offer for Rite Aid, pushes back deadline

The Associated Press

Walgreens substantially lowered its offering price for drugstore rival Rite Aid and raised the number of stores it would be willing to unload to ease monopoly concerns.

The companies initially expected to sell no more than 500 stores, but that was pushed to 1,200 under the new terms announced Monday.

The new offer from for Rite Aid is between $6.50 to $7 per share, depending on how many stores need to be divested. When the deal was first announced in late 2015, Walgreens bid $9 per share, roughly $9.4 billion, for the nation’s third-largest drugstore chain.

The deadline to complete the deal, which expired last week, has been extended to the end of July.

Shares of Rite Aid Corp. tumbled 16 percent to $5.81 early Monday.

The combination of Walgreens and Rite Aid would create a drugstore giant with more than 11,000 stores nationally, even with the sale of more than a thousand stores. That’s a few thousand more than nearest competitor, CVS Caremark Crop.

Rite Aid, based in Camp Hill, Pennsylvania, runs nearly 4,600 drugstores in 31 states, and the addition of its locations is expected to give Walgreens more negotiating muscle with drugmakers and other suppliers and to grow its presence in the Northeast and Southern California.

Walgreens also has a sizable overseas presence, especially in the United Kingdom. It currently runs more than 13,000 stores in 11 countries, including 8,175 in the United States.

Walgreens said last December – more than a year after announcing the Rite Aid deal – that it would sell 865 stores to rival retailer Fred’s for $950 million due to concerns raised by federal anti-trust regulators.

A Walgreens spokesman said today the company still has a deal with Fred’s, but he declined to comment on whether that company had agreed to buy more stores or if another potential buyer had emerged.