Walgreens Says Will Buy Smaller Drugstore Rival Rite-Aid

A Rite Aid pharmacy is pictured in Maine

By Greg Roumeliotis and Lauren Hirsch

NEW YORK -- Drugstore chain Walgreens Boots Alliance said Tuesday it would acquire smaller peer Rite Aid for $17.2 billion including acquired debt.

The $9-a-share cash deal would combine the second- and third-largest U.S. drugstore chains by sales, creating the largest U.S. retail pharmacy chain in numbers of stores.

The price represents a 48 percent premium to Monday's closing price of Rite-Aid, the day before the agreement was signed, the companies said in a joint release.

A Walgreens-Rite Aid deal would need approval from the U.S. Federal Trade Commission, which studies retail mergers to ensure they comply with antitrust law.

Shares of Rite Aid (RAD), which had a market value of $6.36 billion at Monday's close, rose as much as 44 percent to $8.74 on Tuesday after the Wall Street Journal first reported the news. Walgreens (WBA) stock rose as much as 7 percent to $95.48.

-With additional reporting by Siddharth Cavale in Bangalore, India; Diane Bartz in Washington; and Ransdell Pierson and Caroline Humer in New York.

Originally published