The merger of Rite Aid Corporation (NYSE:RAD), a pharmacy chain with grocery store giant Albertsons has helped solve a key U.S. antitrust regulatory problem. This has placed the deal on the path to approval, which is expected later this year.
According to Rite Aid the period of waiting under the Hart-Scott-Rodino Antitrust Improvements Act is now over. This is a good sign, considering the industry is going through a consolidation, which could lead challenges from regulators. CVS Health one of the major rivals of Rite Aid rival, instance, is trying to acquire Aetna, the country’s third largest health insurer. Additionally, earlier this year, the U.S. Justice Department requested additional information about the CVS-Aetna deal.
In the case of the deal between Rite Aid and Albertsons, the news from regulators is a good sign. According to David Balto, a Washington-based lawyer and former Federal Trade Commission policy director, the approval by government regulators shows the deal has not raised much antitrust concerns.
This deal is different from Rite Aid’s sale to Walgreens Boots Alliance, which raised a lot of FTC opposition, and forced party to withdraw the deal last years following a long process with antitrust regulators. Recently Rite Aid announced that it had completed Rite Aid plus related assets to Walgreens Boots Alliance as part of the deal with the pharmacy chain.
In the deal, Walgreens is purchasing a total of 1,932 stores plus three distributions centers from Rite Aid at a cost of $4.4 billion in cash. So far Rite Aid says it has received payments amounting to $4.157 billion in cash. The deal between Albertsons and Rite Aid as well as its remaining 2,500 stores is expected establish a chain with 4,345 pharmacies in stores spread across 38 states and Washington, D.C.
In a statement, John Standley, the Chairman and Chief Executive Officer of Rite Aid said the expiration of the HSR waiting period is a major step towards the sealing of the deal with Albertsons adding that the combination will create a differentiated leader in health, food and wellness so as to accommodate the growing demand as well as evolving customer needs.
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