Deals and IPOs

Walgreens announces deal to buy Rite Aid for $9 a share

Walgreens near deal to buy Rite Aid: DJ

Pharmacy chain Walgreens Boots Alliance announced Tuesday it would buy Rite Aid for $9 per share in an all-cash deal.

The acquisition, first reported earlier in the day, would combine two of the largest U.S. drugstore chains. The price represents a 48 percent premium to Rite Aid's closing price on Monday.

The deal's total enterprise value is $17.2 billion, including acquired net debt. The companies expect it to close by the second half of next year.

"This combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time," said Walgreens Boots Alliance CEO Stefano Pessina in a statement.

A delivery to a Walgreens location in New York City.
Scott Mlyn | CNBC

The acquisition comes amid a wave of consolidation in the health-care sector. Among other proposals this year, Aetna offered about $37 billion for Humana, and Centene bid $6.3 billion for Health Net.

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Many companies in the industry have looked to cut costs in recent years amid changes like the Affordable Care Act.

Walgreens said it expects synergies of more than $1 billion from the deal. Rite Aid stores will initially operate under the same name as a wholly owned subsidiary.

Walgreens had net sales of $76.4 billion in fiscal 2014, accounting for about 20 percent of the retail prescription drug market. Rite Aid had prescription drug sales of $18.1 billion in fiscal 2015, up from $17.2 billion in the previous year.

Rite Aid shares closed more than 40 percent higher Tuesday after reports that a deal could be imminent. Before the spike, Rite Aid had a market capitalization of about $6.4 billion.

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Walgreens and CVS shares also climbed Tuesday.