When there are two major drug stores located across the street from one another, something will certainly change should they merge. And that’s precisely what is going to happen as Walgreens Boots Alliance Inc. and Rite Aid Corp. announced Oct. 27 in a joint press release that Walgreens will acquire Rite Aid for approximately $17.2 billion.
What that means for Hollister is unknown at this time. As of early Wednesday afternoon, both store managers had not yet heard how the deal will shake out for them. Hollister City Manager William Avera said he had not heard about the merger.
“Usually when we have mergers, one store normally closes and moves on,” he said. “I can’t imagine they’d stay right across the street from each other. It’s going to be interesting to see how it shakes out.”
A spokeswoman for Walgreens said it is too early in the process to comment on the fate of any particular Rite Aid store.
“Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy,” Stefano Pessina, CEO and Executive Vice Chairman of Walgreens Boots Alliance said in the press release.
In what may foretell Rite Aid’s national future prospects to remain a separate entity, Pessina went on to say: “Our complementary retail pharmacy footprints in the U.S. will create an even better network. Walgreens Boots Alliance will provide Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care, and to offer innovative solutions for providers, payers and other entities in the U.S. healthcare system. Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time.”
According to the release, the boards of directors of both companies approved the merger, which is still subject to approval by the holders of Rite Aid’s common stock. The deal is expected to close in the second half of 2016. Rite Aid will be a wholly-owned subsidiary of Walgreens Boots Alliance, and is expected to initially operate under its existing brand name. Over time, decisions will be made regarding the integration of the two companies, ultimately creating a fully harmonized portfolio of stores and infrastructure.
Rite Aid, based in Camp Hill, Pa., has about 4,600 drugstores in 31 states. Walgreens, which opened in Hollister in 2013, has roughly 8,200 U.S. stores. After the merger was announced, Rite Aid’s stock rose 43 percent, while Walgreen’s shares rose 6.4 percent, according to the Wall Street Journal.