Report: Walgreens-Rite Aid merger set to go

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After being announced well over a year ago and endless speculation, it looks like the Federal Trade Commission is set to sign off on Walgreens Boots Alliance’s planned acquisition of Rite Aid Corp.

The New York Post reported late Wednesday evening that WBA is bullish that it’s latest store divestiture proposal will sway the FTC to give the blockbuster deal the green light. Citing anonymous sources, the Post report said the FTC could approve the Walgreens-Rite Aid merger in two to four weeks.

Fred’s Inc. on Dec. 19 had announced a $950 million cash deal to purchase 865 Rite Aid stores to be divested for antitrust clearance of WBA’s agreement to acquire Rite Aid. The pact with the discount retailer is subject to FTC approval as well as WBA’s completion of the Rite Aid transaction. Also under the terms of the agreement, Fred’s could be required to buy additional stores if the FTC calls for WBA to divest more stores than was contemplated when the deal with Fred’s was struck in December.

That just might be the scenario that’s unfolding, considering the report by the Post.

On Jan. 30, WBA and Rite Aid extended the end date for the acquisition deal, lowered the purchase price and raised the number of stores that could be divested from up to 1,000 to as much as 1,200. Fred’s soon after issued a statement that its agreement to buy the Rite Aid stores remains in effect. And a bit over a week ago, Fred’s said it has amended a revolving credit facility in the event that it must buy additional Rite Aid stores in connection with the pending Walgreens-Rite Aid merger.

Another factor that may be nudging the Walgreens-Rite Aid merger along is the turnover at the FTC under the Trump administration, which is seen as being more favorable to mergers and acquisitions.

President Trump in his first week in office named commissioner Maureen Ohlhausen, a Republican, as the five-member FTC’s acting chairman. With Ohlhausen as chairman and Democrat Terrell Mc­Sweeny as a commissioner, the FTC will have three vacancies. Trump’s adviser for the new makeup is former commissioner Joshua Wright, a conservative law professor who says M&As rarely hurt consumers and can often help them by lowering prices and improving quality.

The Post report noted that Deborah Feinstein, director of the FTC Bureau of Competition, is looking to wrap up the Walgreens-Rite Aid deal before her departure. Ohlhausen today appointed antitrust attorney Abbott “Tad” Lipsky as acting director of the competition bureau, effective March 6. She also named Alan Devlin, who has served her as an attorney adviser, as acting deputy director of the competition bureau.


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