Walgreens working to finalize Rite Aid deal, clear antitrust hurdles

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By Diane Bartz and Siddharth Cavale | WASHINGTON

WASHINGTON The chief executive of Walgreens
Boots Alliance Inc said Thursday that the biggest U.S.
drug store chain was pressing on with its purchase of smaller
Rite Aid Corp, which was announced in October 2015 and
has not closed.

Rite Aid Corp said on Dec. 20 that it would sell 865 stores
to Fred’s Inc for $950 million to satisfy antitrust
concerns on the deal, which was valued at $9.4 billion when it
was announced in October 2015.

The Federal Trade Commission is assessing the proposed
merger to ensure it complies with antitrust law.

“During the year, we also continued in our effort to get
regulatory approval for our acquisition,” said Stefano Pessina,
Walgreens Boots Alliance chief executive, at an annual
shareholders meeting in New York City.

Pessina declined to detail issues raised in the review: “The
only thing I can repeat is that we are actively engaged in
dialogue with the FTC and we are doing everything we can to
support their work,” he said.

Pessina said Walgreens was also talking to Rite Aid. “These
discussions include taking into account anything required to
gain approval for the transaction,” he said.

It could take two months for the agency to assess a proposed
divestiture of that size since it would look at the proposed
sales, store by store, and in detail, said David Balto, a former
FTC official now in private practice.

“Retail market divestitures are very complex. It’s
unrealistic to assume that they could get through a divestiture
that’s this significant in a few weeks,” said Balto.

The purchase is a big expansion for Fred’s. The chain has
more than 650 discount stores in the southeastern United States
with 350 pharmacies, according to its website.

Walgreens has 13,200 stores, nearly 60 percent of which are
in the United States, while Rite Aid has 4,570 stores in the
United States.

The FTC may be doubly careful after it was stung by the
failure of an earlier retail divestiture. It allowed regional
grocer Haggen to buy 146 stores as part of a deal to allow
Albertsons to buy Safeway in early 2015, only to have Haggen
file for bankruptcy that same year. Albertsons bought dozens of
the stores.

The FTC is also in transition. President Donald Trump named
Commissioner Maureen Ohlhausen the acting chair on Wednesday.
Another commissioner, former Chairwoman Edith Ramirez, leaves
early next month.



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