Rite Aid Gets Regulatory Clearance For Sale Of 1,932 Stores To Walgreens Boots

(RTTNews) - Rite Aid Corp. (RAD) said it has secured regulatory clearance for an amended and restated asset purchase agreement with Walgreens Boots Alliance, Inc. (WBA), whereby WBA will purchase 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375 billion on a cash-free, debt-free basis.

In addition, Rite Aid has the option to purchase generic drugs that are sourced through an affiliate of WBA at a cost substantially equivalent to Walgreens for a period of 10 years. The Hart-Scott-Rodino waiting period expired for the proposed transaction.

Rite Aid noted that the amended and restated purchase agreement between the parties updates the terms of the agreement with Rite Aid announced in June 2017.

Under the amended agreement, Rite Aid will retain approximately 250 additional stores as compared to the prior agreement, resulting in a reduction in the transaction sale price. The company noted that the decision to retain these stores follows discussions between Rite Aid and WBA, as well as the U.S. Federal Trade Commission or FTC.

The 1,932 stores included in the amended agreement are primarily located in the Northeast and Southern regions of the U.S. The three distribution centers are located in Dayville, Conn., Philadelphia and Spartanburg, S.C.

Rite Aid will provide certain transition services to WBA for up to three years after the closing of the transaction.

The boards of directors of Rite Aid and WBA have approved the transaction, which is still subject to other customary conditions. Approval of the transaction does not require a shareholder vote.

Rite Aid and WBA expect to transfer ownership of the stores in phases beginning in October 2017, with the completion anticipated in spring 2018.

Rite Aid said it expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness.

Immediately following the completion of the transaction, Rite Aid will continue to operate approximately 2,600 stores and six distribution centers as well as EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog.