Walgreens working to finalize Rite Aid deal, clear antitrust hurdles

WASHINGTON (Reuters) - The chief executive of Walgreens Boots Alliance Inc WBA.O said Thursday that the biggest U.S. drug store chain was pressing on with its purchase of smaller Rite Aid Corp RAD.N, which was announced in October 2015 and has not closed.

Pedestrians pass a Rite Aid store in Oakland, California in this April 1, 2015 file photo. REUTERS/Noah Berger/Files

Rite Aid Corp said on Dec. 20 that it would sell 865 stores to Fred's Inc FRED.O for $950 million to satisfy antitrust concerns on the deal, which was valued at $9.4 billion when it was announced in October 2015.

The Federal Trade Commission is assessing the proposed merger to ensure it complies with antitrust law.

“During the year, we also continued in our effort to get regulatory approval for our acquisition,” said Stefano Pessina, Walgreens Boots Alliance chief executive, at an annual shareholders meeting in New York City.

Pessina declined to detail issues raised in the review: “The only thing I can repeat is that we are actively engaged in dialogue with the FTC and we are doing everything we can to support their work,” he said.

Pessina said Walgreens was also talking to Rite Aid. “These discussions include taking into account anything required to gain approval for the transaction,” he said.

It could take two months for the agency to assess a proposed divestiture of that size since it would look at the proposed sales, store by store, and in detail, said David Balto, a former FTC official now in private practice.

“Retail market divestitures are very complex. It’s unrealistic to assume that they could get through a divestiture that’s this significant in a few weeks,” said Balto.

The purchase is a big expansion for Fred’s. The chain has more than 650 discount stores in the southeastern United States with 350 pharmacies, according to its website.

Walgreens has 13,200 stores, nearly 60 percent of which are in the United States, while Rite Aid has 4,570 stores in the United States.

The FTC may be doubly careful after it was stung by the failure of an earlier retail divestiture. It allowed regional grocer Haggen to buy 146 stores as part of a deal to allow Albertsons to buy Safeway in early 2015, only to have Haggen file for bankruptcy that same year. Albertsons bought dozens of the stores.

The FTC is also in transition. President Donald Trump named Commissioner Maureen Ohlhausen the acting chair on Wednesday. Another commissioner, former Chairwoman Edith Ramirez, leaves early next month.

Reporting by Diane Bartz and Siddharth Cavale; Editing by Cynthia Osterman