Both Walgreens and Rite-Aid are the two leading drugstore chains throughout the U.S. A merger between the two would result in the largest drugstore chain in America, surpassing CVS. However, the Federal Trade Commission has yet to decide if they will approve the merger which is estimated at a $9.6 billion.
Just earlier this week Rite Aid proclaimed a sale of 865 of its stores in a $950 million deal with a small pharmaceutical company called Fred’s. This purchase is only if the FTC approves the Walgreens-Rite Aid merger. Even though Fred’s hasn’t been authorized as a buyer, Fred’s acquisition might exceed the number of stores the FTC approved.
The FTC, however, is worried that Fred’s is too small to wear Rite Aid’s shoes. They are also concerned that small pharmaceutical company won’t be able to stand in place next to the number one and number three drugstores. It could also be said that Fred’s hastily agreed to the deal in hopes to double the size of its 648 stores.
According to the New York Post, there’s a possibility that Walgreen’s had hoped to spread the deal to at least three other stores including Fred’s, however, the FTC only wanted one buyer which is how Fred’s became the only contender.
The FTC is hesitant due to past experience. When Albertsons proposed a merger with Safeway, the FTC allowed the purchase on the agreement that the supermarket sell 146 stores to Haggen Holdings. The arrangement fell through, nevertheless, when Haggen later went bankrupt.
The deal between the companies should be settled before the FTC leaves. It is imperative that FTC “Chairwoman Edith Ramirez addresses it before she leaves” and the Republicans take over. If Ramirez decides against the Walgreens-Rite Aid merger, there’s a possibility that a block will be placed on the deal preventing it from going any further.