Dive Brief:

• The Wall Street Journal reported on Tuesday that Walgreens Boots Alliance is nearing a deal to purchase Rite Aid Corp, propelling a recent trend in major healthcare and biopharma sector consolidations. 
• If the two firms ultimately reach an agreement, expected to be announced on Wednesday according to the WSJ, the proposed buyout would join the second- and third-largest drug store chains in America.
• Rite Aid shares went soaring more than 40% on the news of an imminent deal announcement. Since Rite Aid's current market value is about $6 billion, the speculation is that Walgreens will offer about $10 billion in a buyout, consistent with the 30%-and-more premiums that have been extended in recent healthcare and biopharma M&As. 

Dive Insight:

The battle between pharmacy giants is about to heat up considerably with this most recent consolidation (if it is ultimately proposed as reported, and if it's approved).

By some metrics, Walgreens is actually the largest drug chain in the U.S., with CVS, Walmart, and Rite Aid right behind. But the landscape changed in the past year as CVS announced a series of proposed deals in 2015 looking to significantly expand its presence.

In May, CVS said it would snap up the nursing home pharmacy Omnicare in a $12.7 billion deal (a 38% premium at the time). That deal was informed by both pharmacies' strong positioning in the Medicare Part D market. Then, the pharmacy giant announced that it would widen its reach by acquiring Target's pharmacies in a $1.9 billion deal that would give it control over another 1,600-plus pharmacies across 47 states (on top of CVS' existing 7,800 stores). 

Now, Walgreens is striking back with this reported deal for Rite Aid. This is yet another thump in a steady drumbeat of healthcare M&As, many of which have involved major payers and pharmacies, including UnitedHealth's $12.8 billion proposed deal for pharmacy benefits giant Catamaran.

It's also one of the first major business undertakings for Walgreens CEO Stefano Pessina, who was appointed permanent CEO for the company after an earnings beat in July. As these benefits managers and drug dispensers consolidate, it's likely to turn up pricing pressure on the biopharma industry even more.

Earlier this year, Walgreens announced that it would beshuttering 200 U.S. stores by 2017 in a cost-cutting push that includes streamlining IT operations and restructuring field and corporate operations after its acquisition of Europe's Alliance Boots.