Walgreens Boots Alliance Inc. and Rite Aid Corp. agreed to reduce the amount Walgreens would pay for its rival by at least $2 billion, after the two companies struggled to get antitrust enforcers to bless the big drugstore deal.
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Walgreens in October 2015 agreed to buy Rite Aid for $9 a share, or about $9.4 billion, in a combination that would result in a drugstore chain with more than 10,000 U.S. stores.
The companies on Monday agreed to sell up to 200 stores on top of the 1,000 they originally planned to sell when deal was first announced. The new agreement would value Rite Aid at between $6.8 billion and $7.4 billion, depending on required store divestitures. The per-share value of the new deal will range from $7 per share if 1,000 stores or fewer need to be sold, to as low as $6.50 per share if 1,200 store divestitures are required.
Rite Aid shares dropped 16% in morning trading to $5.81 as Walgreens shares rose 0.3%.
Antitrust regulators had raised concern that such a big company could hold too much sway in negotiations with pharmacy-benefits managers like CVS Health Corp.'s Caremark or Express Scripts Holding Co., which handle corporate and government drug plans.
Walgreens was the largest drugstore chain in the U.S., with about 8,200 locations, when it agreed to buy No. 3 Rite Aid and its nearly 4,600 U.S. stores.
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CVS Health, which had about 7,800 locations when the Walgreens-Rite Aid deal was announced, is also expanding its U.S. footprint following a deal to buy Target Corp.'s more than 1,600 pharmacies .
Walgreens and Rite Aid, in response to antitrust concerns, said in December that they would sell 865 stores to Fred's Inc. , a regional drugstore chain that only had about 650 stores before the deal was announced.
Both Rite Aid and Walgreens have a major presence in states like California, New York and Massachusetts, while in others, including Florida, Texas and Illinois, there isn't any overlap.
At a meeting with investors last week, Walgreens CEO Stefano Pessina said the companies were discussing "all instruments and actions" they could put in place to win approval from the Federal Trade Commission.
Earlier this month, Mr. Pessina said Walgreens had no backup plan should U.S. antitrust regulators reject the tie-up with Rite Aid.
"We don't want even to think the deal could not be approved after so many months," he said.
Walgreens Boots Alliance was formed when Walgreen Co. completed the acquisition of European drugstore chain Alliance Boots GmbH at the end of 2014, giving the Deerfield, Ill.-based drugstore chain a significant presence overseas. Alliance Boots runs the U.K. drugstore chain Boots and has a vast drug-distribution business in Europe.
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