Walgreens Tweaks Deal With Rite Aid to Earn Approval

Pharmacy store giant Walgreens Boots Alliance is ready to revise its deal to acquire individual stores from Rite Aid Corp in a move designed to resolve outstanding concerns of antitrust and clinch approval in the U.S. for a deal the two companies have pursued in one form or another for over two years.

Walgreens is going through the final stage of its negotiations with the U.S. Federal Trade Commission over the plan it has to acquire over 2,000 stores from Rite Aid and is ready to propose modifications to the deal that could be announced as early as Monday, said sources familiar with the changes.

The deal if approved would be a very hard fought victory for the company and its CEO Stefano Pessina, who has pushed repeatedly for this deal that has not gained regulatory approval since late 2015.

The two companies along with the FTC are near an agreement allowing the deal to move forward, said those in the know but not details were released about the revised deal.

The FTC is closing in on the end of its full review of the plan Walgreens has for the different locations of Rite Aid and must approve this deal or issue a second request that seeks additional information.

A new updated altered filing from Walgreens would stop an in-depth investigation as well as give the FTC another 30 days to come to its final decision, although the FTC could announce a decision sooner if satisfied with the new changes which would resolve its concerns over antitrust.

Shares of Rite Aid were 3.4% higher in early New York trading on Monday, while Walgreens stock was unchanged.

The two pharmacy store chains did not comment about the ongoing negotiations and the FTC did not respond when a request seeking a comment was sent to them.

A modified deal represents the fourth try by Walgreen to gain approval for its purchase to dramatically increase its footprint through a deal with Rite Aid.

If this is successful, Walgreens would become the No. 1 chain of pharmacies in the United States by locations, moving above current leader CVS. That would make Rite Aid No. 3 after it would sell off nearly half of its close to 4,500 stores across the U.S. in the deal with Walgreens.

Initially Walgreens planned to purchase Rite Aid outright in a deal worth $9.4 billion in October of 2015, but the FTC blocked that. Since then two other changes have been made to help close the deal.

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