Stefano Pessina said Walgreens Boots Alliance remains in the ballpark in terms of likely store divestitures that the Federal Trade Commission will require for WBA to finalize its deal to acquire Rite Aid Corp.
“We still believe that our initial estimate is correct. We still believe that at the end we will stay in the range of the stores [to be divested] that we initially indicated, around 500,” Pessina told analysts Wednesday in a conference call on WBA’s fiscal 2016 third-quarter results.
“And timewise, we still believe that we will be able to really do the deal, finish the deal by the end of this calendar year, as we said,” added Pessina, executive vice chairman and CEO at WBA. “So by December, we believe that everything will be done. But of course, it doesn’t depend on us. The FTC will let us know when they are ready.”
In late November, WBA indicated that it might have to divest as many as 1,000 stores to get the green light from regulators for the Rite Aid acquisition. In an investor presentation filed with the Securities and Exchange Commission, WBA said the merger agreement allows for up to 1,000 stores to be sold off “if required by regulators.” But the company said in the presentation that it expected around half that number.
Last month, published reports said the FTC was looking at the WBA-Rite Aid deal in a more positive light. Since the acquisition agreement was announced last fall, speculation among industry observers has ranged from divestitures of hundreds of stores to possibly even thousands for WBA to get regulators to clear the deal.
Together, Walgreens and Rite Aid would create a chain drug retailer with some 12,800 stores. The Northeast and Mid-Atlantic appear to be where Rite Aid would bring the biggest benefit in store coverage for Walgreens.
“Our proposed acquisition of Rite Aid is progressing as planned. As you know, we are in the process of seeking a regulatory approval,” Pessina said in Wednesday’s analyst call. “In parallel, our integration team is continuing its work on preliminary planning. In June, we completed a $6 billion public bond offering to support the funding of the acquisition.”