Walgreens buying Rite Aid, creating drugstore giant

NEW YORK -- Walgreens is buying rival Rite Aid for about $9.41 billion in cash, creating a drugstore giant with nearly 18,000 stores around the world.

The deal combines the largest and third-largest U.S. drugstore chains, based on store counts. And it makes one of the world's largest pharmaceutical buyers even bigger at a time when other key health-care players such as insurers and drugmakers also are expanding through multibillion dollar deals.

Walgreens said it will pay $9 for each share of Rite Aid Corp. That's a 48 percent premium to Rite Aid's closing price of $6.08 Monday. Shares of both companies jumped Tuesday after The Wall Street Journal first reported the deal.

The companies said the deal is worth $17.2 billion, when debt is included.

Walgreens Boots Alliance Inc. has more than 13,100 stores around the world. Rite Aid, which is based in Camp Hill, Pennsylvania, has more than 4,600 stores in the U.S.

The deal comes less than year after Walgreens bought European health and beauty retailer Alliance Boots. Besides its namesake stores, Deerfield, Illinois-based Walgreens also owns Duane Reade stores in the U.S.

A combination with Rite Aid gives Walgreens additional purchasing power in negotiating prices with drug companies, a hot topic given the rapid rise in cost for some prescriptions.

Adding Rite Aid's stores also could help Walgreens lower price for its customers because its growing volume of prescriptions would put it in a better position in talks with drug providers.

Rite Aid stores initially will keep its name after the deal closes, Walgreens said, but that may change over time. The deal is expected to close in the second half of next year.