# Does Walgreens Still Own Rite Aid? A Detailed History - Canonical: https://33rdsquare.com/does-walgreens-still-own-rite-aid-a-detailed-history/ - Published: 2023-10-18 - Author: Lillie Gabler - Categories: [Tips](https://33rdsquare.com/category/home/tips/) --- The relationship between pharmacy giants Walgreens and Rite Aid has dramatically evolved over the past few years. While a major merger was announced in 2015, the deal eventually crumbled under regulatory scrutiny. Walgreens pivoted to acquire a portion of Rite Aid stores instead. Rite Aid continues operating as an independent company today under new ownership. Here is a comprehensive look at the failed merger, Walgreens‘ acquisition of Rite Aid assets, who currently owns Rite Aid, and how the pharmacy leaders are positioning themselves for the future. ## The Proposed Merger and Subsequent Fallout In October 2015, Walgreens announced plans to acquire all outstanding shares of Rite Aid for approximately $17.2 billion in an all-cash transaction. Under the terms of the original agreement, Walgreens would purchase Rite Aid at a per share price of $9.00, a nearly 50% premium to the 10-day average price at the time. The merger would have joined Walgreens‘ 8,200 stores with Rite Aid‘s 4,600 locations, establishing by far the largest drugstore chain in America. Walgreens claimed the deal would deliver $1 billion in savings within three years. However, after nearly two years of negotiations and regulatory review, Walgreens terminated the merger agreement in June 2017 due to opposition from the Federal Trade Commission (FTC). The FTC indicated that the proposed acquisition would harm competition in pharmacy markets and lead to higher prices for consumers. Regulators voiced strong anti-trust concerns about the transaction, which would have given Walgreens-Rite Aid a dominant position with over 50% market share in some U.S. regions. Ultimately, Walgreens and Rite Aid could not agree to terms satisfactory to gain FTC approval. As a result, the ambitious merger joining two pharmacy giants did not come to fruition. ## Walgreens Acquires Rite Aid Assets While the full merger agreement was blocked, Walgreens proceeded with a scaled back acquisition of Rite Aid assets. In September 2017, Walgreens announced a revised agreement to purchase 1,932 Rite Aid stores, three distribution centers, and related inventory for $4.375 billion in cash. Walgreens said this new transaction was expected to provide an easier path to regulatory approval. And in March 2018, Walgreens completed the acquisition of the Rite Aid stores and converted them to the Walgreens brand. This pared down deal boosted Walgreens‘ footprint while avoiding extended scrutiny from the FTC. It enabled Walgreens to quickly establish an unprecedented scale and reach in the pharmacy sector. Meanwhile, Rite Aid continued operating its remaining 2,650+ stores as a standalone business. ## Current Ownership and Management of Rite Aid Today, Rite Aid Corporation is owned by the Idaho-based grocery company Albertsons Companies, which operates grocery chains like Albertsons, Safeway, Vons, and more. Albertsons has 2,277 stores across 34 states and Washington D.C. Cerberus Capital Management, a private equity firm, owns a controlling stake in Albertsons. In February 2018, Albertsons Companies announced it would acquire the remaining Rite Aid stores that were not sold to Walgreens. The deal closed in September 2018. So Rite Aid now operates as a wholly owned subsidiary of Albertsons. However, Rite Aid continues to be run as its own entity with distinct management, branding, and strategy from Albertsons and Albertsons-owned chains. The ownership gives Rite Aid resources to invest in revitalizing the brand, while still competing directly with Walgreens in the pharmacy space. ## Walgreens Merger Forms Walgreens Boots Alliance Around the same time as the Rite Aid discussions, Walgreens was pursuing another major deal. In December 2014, Walgreens completed a merger with European pharmacy giant Alliance Boots to form Walgreens Boots Alliance (WBA). Alliance Boots, based in the U.K., owned pharmacy chain Boots and pharmaceutical wholesaler Alliance Healthcare. The merger made WBA the first global, pharmacy-led health enterprise, now spanning 25 countries with over 18,000 stores worldwide. The combination brought together Walgreens‘ 8,200 U.S. locations with Alliance Boots‘ 2,500+ stores. It gave Walgreens access to new markets and the integrated global scale to drive future growth in the midst of pharmaceutical and retail industry consolidation. ## Walgreens and Rite Aid: Separate Entities Today Despite being industry peers and having a common owner in Albertsons/Cerberus, Rite Aid and Walgreens continue operating as completely autonomous businesses today. Some key differences: - **Headquarters:** Walgreens is headquartered in Deerfield, IL while Rite Aid is based in Camp Hill, PA. - **Stores:** Walgreens has over 9,000 stores in all 50 U.S. states compared to Rite Aid‘s 2,400+ stores in 17 states. - **History:** Walgreens was founded in 1901, Rite Aid in 1962. - **Market Position:** Walgreens is the #2 pharmacy retailer while Rite Aid is #3 behind CVS. - **Branding:** Walgreens markets itself as "at the corner of happy and healthy" while Rite Aid is "with us, it‘s personal." The pharmacy chains have separate management teams, pricing strategies, loyalty programs, store formats, product assortment, and more. Rite Aid and Walgreens directly compete for pharmacy market share in the regions where they both operate stores. ## Walmart is a Key Walgreens Competitor Walgreens has a very different ownership structure and business model compared to Walmart. Walgreens is a public company trading on the Nasdaq while Walmart is also public but about 10x larger by revenue. Walgreens operates just one retail pharmacy business model. Walmart has numerous divisions like Walmart U.S., Sam’s Club, and e-commerce along with pharmacies within its supercenters. While they compete in the pharmacy space, Walgreens‘ core business remains retail pharmacy whereas Walmart is the world’s #1 retailer spanning many categories and formats. Despite some overlap, the two companies are completely independent. ## Walgreens‘ Major Subsidiaries and Investments Walgreens has grown beyond its namesake drugstores, particularly after merging with Alliance Boots. Some of Walgreens‘ major subsidiaries and strategic investments include: - **Duane Reade:** Walgreens acquired the New York pharmacy chain in 2010 for $1.1 billion. - **Alliance Boots:** Walgreens‘ 2015 merger makes it the parent company of Boots and Alliance Healthcare. - **AmerisourceBergen:** Walgreens owns 26% of this U.S. pharmaceutical wholesaler. - **Option Care Health:** Walgreens acquired this infusion services provider for $1.4B in 2021. Walgreens is poised to continue making investments and acquisitions to diversify its health care offerings and expand into higher-margin services beyond traditional retail pharmacy. ## The Rite Aid Acquisition Significantly Expanded Walgreens‘ Retail Footprint Walgreens’ move to acquire nearly 2,000 Rite Aid locations in early 2018 instantly catapulted Walgreens to become the pharmacy leader in America. Some key facts about the transformative Rite Aid deal: - Purchase price was $4.375 billion in cash - It added 1,932 Rite Aid stores to Walgreens’ footprint - Walgreens’ total U.S. stores increased to over 9,500 - Acquired Rite Aid locations were converted to Walgreens stores - Enhanced Walgreens’ economies of scale and negotiating power With the Rite Aid stores in its fold, Walgreens commanded nearly 20% of the U.S. retail pharmacy market share – firmly establishing it as the #1 national player. The deal also expanded Walgreens’ presence on the East Coast and West Coast markets. ## FedEx Partnership Brings Package Services to Walgreens Stores In June 2019, Walgreens announced a partnership with FedEx to provide FedEx package pickup and drop-off services at more than 8,000 Walgreens locations nationwide. The FedEx partnership was launched in 2020. Some of the FedEx services now available at Walgreens include: - FedEx Ground shipping and FedEx Express U.S. domestic shipping - International shipping with FedEx Express - Return drop off for FedEx SmartPost packages - In-store packing station with FedEx supplies The arrangement makes FedEx shipping more convenient for Walgreens shoppers. In turn, it drives foot traffic to Walgreens stores and provides added value to customers. ## Boycott Pressures Walgreens Over Sourcing in China’s Xinjiang Region In 2021, some human rights groups and activists began calling for a boycott of Walgreens over its retail sourcing practices involving Xinjiang, China. The boycotters accuse Walgreens of sourcing some beauty and personal care products containing cotton and other materials from China’s Xinjiang region. There is evidence of forced labor and human rights abuses impacting Uyghur Muslims in Xinjiang. While Walgreens says it has strict rules against forced labor in its supply chain, campaigners argue the company needs to cut all ties with the region to avoid benefiting from the repression of Uyghurs. The boycott seeks to pressure Walgreens to change its sourcing standards. Walgreens maintains only a minimal level of retail production sourcing occurs in Xinjiang, estimating under 1% of beauty products it sells are produced in the region. ## Why Walgreens Isn’t Changing Its Iconic Brand Name With 117 years of brand equity, Walgreens has no plans in the works to change its company name or branding. The Walgreens name will continue to appear on its 9,000+ pharmacies across the U.S., Puerto Rico, and Latin America. While the company formed a new legal entity, Walgreens Boots Alliance, after its merger with Alliance Boots, the Walgreens brand itself remains intact. Consumers can still expect to see the same iconic storefront signage and trusted retail pharmacy experience. Walgreens was founded in 1901 and has built tremendous unprompted brand awareness over more than a century in business. As Walgreens expands its health care services, the company realizes the importance of retaining its familiar retail pharmacy branding that is recognized everywhere from Manhattan to small towns. ## The Origins and Journey of Rite Aid’s Name Rite Aid’s history spans six decades, but it didn’t always operate under its current widely known brand name. Some key milestones: - Founded as “Thrif D Discount Center” in 1962 by Alex Grass in Scranton, PA - Expanded through mergers and consolidations of regional chains - Changed name to “Rite Aid” in 1968 - Acquired Gray Drug chain in 1987, expanding Rite Aid‘s Northeast presence - Purchased Brooks/Eckerd stores from Jean Coutu in 2007, expanding Rite Aid into the South From its early roots as a regional discount pharmacy, Rite Aid gradually grew into one of the nation’s largest drugstore chains through strategic M&A activity. Its evolving name reflects its growth and achievement of national scale. ## Financial Difficulties Have Challenged Rite Aid’s Performance Rite Aid has faced some notable financial challenges in recent years that have shrunk its store footprint and market position. - Rite Aid has not turned an annual profit since 2013. - It was saddled with nearly $7 billion in debt as of 2020. - Competition from CVS, Walgreens, Walmart, and grocery chains has hampered growth. - Rite Aid’s stock price plunged from over $8/share in 2015 to under $1 in 2020 as profits fell. - The company has closed hundreds of underperforming stores to cut costs. However, Rite Aid remains in operation and ranks among the nation’s largest retail pharmacy chains, filling nearly 300 million prescriptions annually. Cost cutting and right-sizing efforts have helped it stabilize and refocus strategically. ## Can Rite Aid Succeed in the Future? Despite past struggles, Rite Aid appears positioned for a brighter future by playing to its strengths and solidifying its niche. - Strong reputation as a trusted neighborhood pharmacy brand - Popular wellness+ loyalty program with over 80 million members - Growing focus on e-commerce and enhanced pharmacy app - Opening smaller footprint stores for convenience - Expanding health services and screenings - Strong pharmacy benefit management (PBM) capabilities - Strategic partnerships with grocers like Walmart to improve reach - Backing of new owner Albertsons with extensive resources Though it will likely remain the third largest pharmacy retailer, Rite Aid’s brand equity, mix of stores and digital presence, focus on pharmacy services, and strategic initiatives under Albertsons should sustain its segment of the market. ## Conclusion The relationship between Walgreens and Rite Aid has experienced major developments since 2015. While Walgreens now operates over 1,900 former Rite Aid locations, Rite Aid continues charting its own course as an independent pharmacy retailer. Both companies are forging partnerships, emphasizing pharmacy services, investing in digital experiences, and responding to competitive forces. The pharmacy leaders aim to secure their positions fulfilling consumer health and wellness needs into the future. --- Source: [Does Walgreens Still Own Rite Aid? A Detailed History](https://33rdsquare.com/does-walgreens-still-own-rite-aid-a-detailed-history/)