Dive Brief:

• In hopes of clearing the way for their pending merger, Walgreens and Rite Aid announced they will sell 865 stores, according to the Los Angeles Times.
• The $950 million sale to rival chain Fred’s will divest Walgreens and Rite Aid of 6%–7% of their retail locations.
• The deal has not yet been approved by the Federal Trade Commission (FTC), but Wall Street responded positively to the announcement.

Dive Insight:

Walgreens originally announced its plans to purchase Rite Aid in October 2015, but antitrust concerns delayed the deal. The new announcement is expected to speed FTC approval. As part of the sale agreement, Fred’s will purchase additional stores to appease the FTC if necessary.

However, one expert predicted that up to 3,000 stores may close before and after the deal anyway, due to the number of locations with Walgreens and Rite Aid stores close to each other.

Should Walgreens succeed in its $9.4-billion purchase of Rite Aid, it will surpass the number of locations owned by CVS to become the largest U.S. drugstore chain. Fred’s would become the country’s third-largest, and with a competitive national presence, it could be positioned to provide pharmacy benefit management services. Walgreens stands to strengthen its own PBM business, as well as to expand its retail clinic presence.

The pending merger between Rite Aid and Walgreens could strengthen relations with providers as they combine forces. While retail clinics have not been a true substitute for ED visits as one study found earlier this year, pharmacy-provider partnerships can create a helpful symbiotic relationship where a pharmacy potentially increases traffic and in-store sales while providers can receive data on retail clinic interventions or referrals for patients who come in and need further testing or care.