Walgreens-Rite Aid Merger Cancelled, Including Sale of Stores to Fred's

An old-school Fred's on US 65 in Marshall, AR, as seen one day after the Walgreens-Rite Aid merger termination announcement. Appropriately enough, this Fred's is viewed here under gray, rainy skies, and no longer has an operating pharmacy department. But let's hope things clear up for the chain soon! :)

This news is just a tad old (by a day or two) as of posting, so I wanted to be sure and get a quick update on the situation out before it got any older. As I reported here on the blog last December, Walgreens and Rite Aid announced that, should their planned merger go through, the Rite Aid stores which would need to be divested per FTC request would be sold to Memphis-based Fred's. The total number of projected divested stores increased in the months between then and now, but even as of my initial post, the projected number would've propelled Fred's to the spot of third-largest pharmacy chain in the US.

However, all of that was contingent on the phrase "should their planned merger go through." Fortunately or unfortunately, it was announced on June 29th, 2017, that the long-sought merger has now officially been cancelled. Instead, a new deal was reached which will see Walgreens acquiring pretty much half of Rite Aid's portfolio of stores; the remaining half will continue to operate as Rite Aids, and Rite Aid will continue to operate as a corporation independent of Walgreens, albeit short 2,186 stores.

While this news represents a victory for consumers and consumer advocates, who feared Walgreens would gain unfair price control, it also means that Fred's no longer will become America's third-largest pharmacy chain as previously reported. In fact, as of right now it sounds like they are not involved in the new Walgreens-Rite Aid deal whatsoever, although that could change as a few stores still in need of divesting could emerge. Fred's remains undeterred in their goal to shift their focus to their pharmacies and expand their footprint, according to the Memphis Business Journal. Personally, I'm glad to hear they're still committed to future growth, and honestly, I'm also glad the merger fell through; as far as Fred's is concerned, I was worried that they would over-expand in acquiring the divested Rite Aid stores in unfamiliar regions and would experience a negative outcome. No longer being tied to this deal ought to allow them to expand more slowly, healthily, and organically.

Some other interesting tidbits about the new Walgreens-Rite Aid deal include the facts that Walgreens will now have to pay Rite Aid a previously-agreed-upon $325 million merger termination fee in addition to the purchase price for the stores and three distribution centers; that an affiliate of Walgreens will now supply generic drugs to Rite Aid to compensate for their store count being cut in half (in order to help Rite Aid's future viability); and that Rite Aid will now be exiting entire states completely, as well as drastically reducing their presence in several others. More information on all of those pieces of info, as well as more in-depth information on the news, can be found at the news article links in this post.

Mississippi is one of the states Rite Aid will be drastically reducing its presence in with the sale of half of its stores to Walgreens. In fact, a list found by a fellow flickr member claims that Rite Aid will go from 25 stores in MS to just one. It is unknown as of right now which location of the 25 in the state will remain open as Rite Aid; the rest will likely become Walgreens. I'll try to keep you posted as that news comes out. For now, I'll say that I'm happy that I've photographed both of my immediate local Rite Aids, in Horn Lake and Southaven; I've posted pictures of the former to the blog here, and will post my pictures of the latter here on the blog sometime in the future.

That's what's going on with Walgreens, Rite Aid, and Fred's nationally. Until next time - which should hopefully be very soon; I have some good posts planned! - have fun exploring the retail world wherever you are!

Retail Retell