Rite Aid to increase Walgreens Boots’ US footprint
Rite Aid’s (RAD) acquisition would improve Walgreens Boots Alliance’s (WBA) physical reach across the United States, increasing its store count by over 50%. Walgreens Boots currently has roughly 8,200 stores in the country, while Rite Aid has about 4,600 stores. Together, the combined entity will have about 13,000 stores, making it the largest pharmacy retail chain in the world. According to size, this would place the merged company above CVS Health (CVS), which currently has 7,800 stores across the United States. The merged entity will also be able to better handle increasing competition from supermarkets and mass merchants such as Kroger (KR) and Walmart (WMT).
Rite Aid’s acquisition to bring synergies of $1 billion
After its acquisition of Rite Aid, Walgreens Boots expects to realize synergies of around $1 billion, which would come mainly from internal efficiencies and a better network. The synergies and benefits will be entirely within Walgreens Boots’ Retail Pharmacy USA division. The company has not yet reported synergies separately as it did in the case of the Alliance Boots acquisition.
Walgreens Boots is expected to realize operating synergies by cutting costs through job reduction and store closures. The deal will give Walgreens Boots improved negotiating power with suppliers as a result of its increased scale. The company is also likely to benefit in the areas of private label developments and logistics.