New agreement replaces previous merger agreement with Rite Aid and
proposed divestiture transaction with Fred's
DEERFIELD, Ill.--(BUSINESS WIRE)--
Walgreens Boots Alliance, Inc. (Nasdaq: WBA) announced today a new
definitive agreement with Rite Aid Corporation under which Walgreens
Boots Alliance will purchase 2,186 stores, three distribution centers
and related inventory from Rite Aid.
The consideration for the transaction will be $5.175 billion in cash,
the assumption by Walgreens Boots Alliance of the related real estate
leases and the grant of an option to Rite Aid, exercisable through May
2019 and subject to certain conditions, to become a member of Walgreens
Boots Alliance's group purchasing organization, Walgreens Boots Alliance
Development GmbH. Walgreens Boots Alliance will also assume certain
limited store-related liabilities as part of the new transaction.
This new agreement replaces the previous merger agreement with Rite Aid,
announced in October 2015 and amended in January 2017, and the agreement
to divest certain Rite Aid stores to Fred's, Inc. announced in December
2016. Both of these agreements have been terminated, and Walgreens Boots
Alliance will pay Rite Aid the $325 million termination fee with respect
to their merger agreement.
The new transaction is subject to the expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and other customary closing
conditions. The initial closing of the new transaction is expected to
occur within the next six months.
Upon the initial closing of the new transaction, Walgreens Boots
Alliance will begin acquiring the stores and related assets on a phased
basis over a period of approximately six months, and intends to convert
acquired stores to the Walgreens brand over time.
Walgreens Boots Alliance expects the new transaction to be modestly
accretive to its adjusted diluted net earnings per share in the first
full year after the initial closing of the new transaction, and expects
to realize synergies from the new transaction in excess of $400 million.
These synergies are expected to be fully realized within three to four
years of the initial closing of the new transaction and derived
primarily from procurement, cost savings and other operational matters.
"This new transaction extends our growth strategy and offers additional
operational and financial benefits," said Walgreens Boots Alliance
Executive Vice Chairman and CEO Stefano Pessina. "It will allow us to
expand and optimize our retail pharmacy network in key markets in the
U.S., including the Northeast, and provide customers and patients with
greater access to convenient, affordable care. We believe this new
transaction addresses competitive concerns previously raised with
respect to the prior transaction and will streamline and simplify the
transition for customers, team members and other stakeholders."
Notes to Editors:
About Walgreens Boots Alliance
Walgreens Boots Alliance (Nasdaq: WBA) is the first global pharmacy-led,
health and wellbeing enterprise.
The company was created through the combination of Walgreens and
Alliance Boots in December 2014, bringing together two leading companies
with iconic brands, complementary geographic footprints, shared values
and a heritage of trusted health care services through pharmaceutical
wholesaling and community pharmacy care, dating back more than 100 years.
Walgreens Boots Alliance is the largest retail pharmacy, health and
daily living destination across the USA and Europe. Walgreens Boots
Alliance and the companies in which it has equity method investments
together have a presence in more than 25* countries and employ more than
400,000* people. The company is a global leader in pharmacy-led, health
and wellbeing retail and, together with the companies in which it has
equity method investments, has over 13,200* stores in 11* countries as
well as one of the largest global pharmaceutical wholesale and
distribution networks, with over 390* distribution centers delivering to
more than 230,000** pharmacies, doctors, health centers and hospitals
each year in more than 20* countries. In addition, Walgreens Boots
Alliance is one of the world's largest purchasers of prescription drugs
and many other health and wellbeing products.
The company's portfolio of retail and business brands includes
Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as
increasingly global health and beauty product brands such as No7,
Botanics, Liz Earle and Soap & Glory.
In October 2016Walgreens Boots Alliance received the United Nations
Foundation Global Leadership Award for its commitment to the UN's
Sustainable Development Goals. The company also ranks No. 1 in the Food
and Drug Stores industry of Fortune magazine's 2017 list of the World's
Most Admired Companies.
More company information is available at www.walgreensbootsalliance.com.
* As of 31 August 2016, using publicly available information for
** For 12 months ending 31 August 2016, using publicly available
information for AmerisourceBergen.
Cautionary Note Regarding Forward-Looking Statements
All statements in this release that are not historical statements,
which include, without limitation, those regarding the pending asset
purchase agreement between Walgreens Boots Alliance and Rite Aid and the
transactions contemplated thereby and the termination of the merger
agreement with Rite Aid and the transactions contemplated thereby and
the possible effects thereof, are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements include, but are not
limited to, statements regarding the expected timing of the closing of
the transactions contemplated by the pending asset purchase agreement
between Walgreens Boots Alliance and Rite Aid and the transactions
contemplated thereby, the ability of the parties to complete the
transactions considering the various closing conditions, and the outcome
of legal and regulatory matters, the termination of the merger agreement
with Rite Aid and the transactions contemplated thereby (including the
termination of the divestiture agreement to sell certain Rite Aid assets
and stores to Fred's, Inc.) and their possible effect. Words such as
"expect," "pending," "potential", "likely," "preliminary," "would,"
"could," "should," "can," "will," "project," "intend," "plan," "goal,"
"continue," "synergy," "on track," "believe," "seek," "estimate,"
"anticipate," "may," "possible," "assume," and variations of such words
and similar expressions are intended to identify such forward-looking
statements. These forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties and
assumptions, known or unknown, which could cause actual results to vary
materially from those indicated or anticipated. Such risks include, but
are not limited to, risks related to the proposed transactions and
acquisitions generally, including the risk that the transactions may not
close due to one or more closing conditions to the transactions not
being satisfied or waived, such as certain regulatory approvals not
being obtained, on a timely basis or otherwise, or that a governmental
entity prohibited, delayed or refused to grant approval for the
consummation of the transactions or required certain conditions,
limitations or restrictions in connection with such approvals, risk that
the business of Walgreens Boots Alliance or the Rite Aid stores proposed
to be sold to Walgreens Boots Alliance may suffer as a result of
uncertainty surrounding the transactions, risks related to the ability
to realize the anticipated benefits of the proposed transactions, the
outcome of legal and regulatory matters, including with respect to the
outcome of discussions with the U.S. Federal Trade Commission and
otherwise in connection with the pending acquisition of certain Rite Aid
assets by Walgreens Boots Alliance, the risk of unexpected costs,
liabilities or delays, changes in management's assumptions, the risks
associated with the integration of complex businesses, and risks
associated with changes in laws, regulations or interpretations thereof.
These and other risks, assumptions and uncertainties are described in
Item 1A (Risk Factors) of Walgreens Boots Alliance's Annual Report on
Form 10-K for the fiscal year ended August 31, 2016, which is
incorporated herein by reference, and in other documents that Walgreens
Boots Alliance files or furnishes with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the date they are made. Except to the extent required by law,
Walgreens Boots Alliance does not undertake, and expressly disclaims,
any duty or obligation to update publicly any forward-looking statement
after the date of this release, whether as a result of new information,
future events, changes in assumptions or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170629005378/en/
Walgreens Boots Alliance, Inc.
+1 847 315 2935
International / Laura
+44 (0)207 980 8585
Gradwell and Ashish Kohli
+1 847 315 2922
Source: Walgreens Boots Alliance, Inc.
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