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Walgreens' Rite Aid acquisition includes pharmacy benefit management unit

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Walgreens Boots Alliance Inc. will acquire rival drugstore chain Rite Aid Corp., a deal which includes Rite Aid's small pharmacy benefit management subsidiary and marks the latest development in a movement to consolidate U.S. PBM businesses.

Deerfield, Illinois-based Walgreens announced late Tuesday it will acquire Rite Aid for $17.2 billion in cash and acquired debt.

The deal is expected to close in the second half of 2016, Walgreens CEO Stefano Pessina said during a conference call Wednesday with investment analysts.

“This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients. Our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online,” Mr. Pessina said in a statement Tuesday.

It is unclear how Rite Aid's PBM, Envision Pharmaceutical Services, which it acquired in June, will fit into Walgreens' strategy, and a Walgreens spokesman declined to comment.

During Wednesday's conference call, Alex Gourlay, president of Walgreen Co., labeled Envision “an important but relatively small PBM business” that will “help us understand access in America better” and “create a market which is affordable.”

“We think this could be a way into that in terms of Envision,” Mr. Gourlay said.

Mr. Pessina added the PBM will provide “a good opportunity to learn.”

Walgreens previously exited the pharmacy benefits space in 2011 when it sold its PBM unit to Catalyst Health Solutions Inc.

And more recently, Mr. Pessina in April told Forbes that buying a PBM is “not necessarily the best model for the future” and said it was an unlikely step for Walgreens.

But a string of recent deals have led to PBM consolidation, which provides those businesses with more mass and bargaining power to negotiate with drug makers over drug prices. For example, Optum Inc., a unit of United HealthCare Services Inc., in July bought rival Catamaran Corp., a PBM based in Schaumburg, Illinois.

Additionally, CVS Health Corp. in August acquired pharmacy services provider Omnicare Inc., and in June bought the pharmacy stores and medical clinic of Target Stores Inc.