Walgreens seals deal to buy smaller drugstore rival Rite-Aid

Walgreens is buying rival Rite-Aid for $17.2 billion./ REUTERS

Reuters — Drugstore chain Walgreens Boots Alliance Inc. said on Tuesday it would acquire smaller peer Rite Aid Corp for $17.2 billion including acquired debt.

The $9-a-share cash deal would combine the second- and third-largest U.S. drugstore chains by sales, creating the largest U.S. retail pharmacy chain in numbers of stores.

The price represents a 48% premium to the closing price of Rite-Aid on Monday, the day before the agreement was signed, the companies said in a joint statement.

A Walgreens-Rite Aid deal would need approval from the U.S. Federal Trade Commission, which studies retail mergers to ensure they comply with antitrust law.

Shares of Rite Aid, which had a market value of $6.36 billion at Monday's close, rose as much as 44% to $8.74 on Tuesday after the Wall Street Journal first reported the news. Walgreens stock rose as much as 7 percent to $95.48.