If you know anyone who’s interested in buying around 650 grocery stores, Walgreens and Rite Aid would like to hear about it. The two drugstore chains need to find a buyer for between 500 and 1,000 stores to get their merger approved by the Federal Trade Commission, and no one is interested.
The buyer of the new stores would have to turn them into a new chain, and private equity firms that looked into the deal said that the stores for sale are scattered across the country, and there simply wouldn’t be enough stores to compete effectively against the mega-chains Walgreens/Rite Aid (Walgriteaid?) and CVS.
One promising suitor was the largest grocery company in the country, Kroger. Reuters reports that according to “a source familiar with the situation,” its interest in acquiring the stores for sale waned when the Federal Trade Commission told Kroger that it would not be allowed to acquire the stores only to close them and move the pharmacy business inside the nearest Kroger-owned supermarket.
The merger could still go forward, but Walgreens and Rite Aid will still need a valid buyer for those stores to present to the FTC. Without that, the FTC could file suit to block the deal, and we all saw how well that worked out for another retail mega-merger in the last year, Staples and Office Depot, which called off a planned merger after a federal judge found that the merger would be harmful to the companies’ corporate office supply customers, even with some of its business sold off to a third company.
by Laura Northrup via Consumerist