Retail Merger Trend Continues with Walgreens $17+ Billion Purchase of Rite Aid

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Tue. October 27th, 2015 - by Melissa De Leon Chavez

DEERFIELD, IL - With a number of large mergers and acquisitions in the previous two years of some of the largest banners in retail, could the landscape of the industry be changing?

Yet another large dollar merger has taken place with the announcement of Walgreens’ $17.2 billion purchase of rival Rite Aid, which represents a 48 percent premium to Rite Aid's closing stock price Monday, according to Crain’s Chicago Business. 

Walgreens, who is one of the largest drugstores in the nation, added fruits and vegetables to 37 stores in or near food deserts back in 2013, according to a CBS Denver report, as part of a commitment to bring healthy foods to areas in need. Some stores even offer produce options on line, depending on availability.

Now, this latest union marries the U.S.'s largest drugstore with its third-largest and adds 4,570 stores in 31 states to Walgreens 8,200+ existing locations.

Retail strategies at a glance over the past two years have yielded a growing trend in uniting rivals to create an even bigger banner in the market, most recently including:

  • Safeway and Albertsons
  • Ahold and Delhaize
  • Kraft and Heinz

Many have awarded close attention by the Federal Trade Commission (FTC) to make sure there is no violation of antitrust laws that could potentially monopolize the market, resulting in rapid growing pains for chains like Haggen who bought a significant number of Albertsons to allow the merger to succeed.

The same attention prevented yet another marked merger, that of US Foods and Sysco, who finally agreed to remain separate after the FTC took the two distributors to court.

As of yet, however, no antitrust issues have been raised in regards to this latest union, despite the fact that this will bring Walgreens store count to almost 13,000 in the U.S. when Crain’s reports closest rival CVS Pharmacy only has 7,800.

It will be interesting to see how this and other mergers in the retail circuit continue to change the buy-side. Stay tuned to AndNowUKnow as we continue to follow these trends and their influences on the produce industry.