Walgreens is purchasing rival Rite Aid in a $17.2 billion deal, company officials announced this week.
This acquisition will dramatically change the landscape of the drug store industry from mom and pop shops dotting the landscaping to two giant chains; Walgreens-Rite Aid and CVS Health.
The deal means the drug store industry’s second and third largest operators will come together and add fuel to existing competition between Walgreens and CVS Health. Consolidating will not only bolster competition against other drug stores, it will also give Walgreens more leverage when negotiating with drug companies, according to media reports.
Representatives from Walgreens said Rite Aid will keep its brand name for the time being. Walgreens is anticipated to save more than $1 billion as a result of combining purchasing power and cost cuts.
Earlier this year, CVS acquired Target’s pharmacy business for $1.9 billion and plans to convert more than 1,660 locations into CVS pharmacies.