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FTC warming to WBA-Rite Aid merger, report says

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Shares of Walgreens Boots Alliance and Rite Aid edged up on Friday following a news report that the Federal Trade Commission is looking more favorably at the companies’ merger deal.

The New York Post reported late Thursday that there are “growing signs” the FTC will give the green light to WBA’s $17.2 billion deal to acquire Rite Aid. Citing anonymous sources, the Post article said the FTC’s approval “would come with conditions,” with one of the agency’s chief concerns being the combined entities’ extra leverage in negotiating drug prices with PBMs.

Thus far, industry observers have focused mainly on the number of stores that WBA would need to divest to get the FTC’s blessing for the deal. WBA has indicated that it’s willing to divest up to 1,000 stores to gain regulatory approval but expects divestitures to be less than half that number.

Together, Walgreens and Rite Aid would create the largest U.S. chain drug retailer, with more than 12,700 stores.

WBA executives have reiterated that they expect the WBA-Rite Aid merger transaction to close in the second half of this year, pending Federal Trade Commission approval and other conditions.

Under the deal, announced Oct. 27, WBA agreed to pay more than $9 billion in cash, or $9 per share, for the Camp Hill, Pa.-based drug chain and assume over $7 billion in net debt. Late last month, WBA announced a $6 billion debt offering to help finance the $17.2 billion acquisition.


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