Walgreens Boots Alliance to buy Rite Aid in $17.2bn deal

The multi-billion dollar deal is subject to regulatory approval

Global pharmacy giant Walgreens Boots Alliance has agreed to buy its US-based rival Rite Aid in a $17.2bn (£11.2bn) all-cash deal.

If approved by regulators, the deal would see two of the biggest US drug stores combined.

Walgreens Boots Alliance was created when UK High Street chemist Alliance Boots merged with the US drugstore Walgreens last year.

Rite Aid is expected to initially continue operating under its own name.

The Pennsylvania-based company, which has been in operation since 1962, saw its shares soar more than 40% on Tuesday after the Wall Street Journal reported that a deal may be in the wings.

'Significant value'

Walgreens Boots Alliance said Rite Aid shareholders would receive $9 per share under the deal. Both firms said the transaction was expected to be completed half way through next year.

Pennsylvania-based Rite Aid bought the Brooks and Eckerd drugstore chains in 2007

Walgreens Boots Alliance said it expected to finance the transaction "through a combination of existing cash, assumption of existing Rite Aid debt and issuance of new debt".

"Today's announcement is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy," said chief executive Stefano Pessina.

Rite Aid's chief executive John Standley said the deal would deliver "significant value" to the firm's shareholders. The retail chain has some 4,600 stores across the US and is the largest drugstore chain on the East Coast.

Walgreens Boots Alliance already employs more than 370,000 people and has a presence across some 25 countries. The firm is set to release its fourth quarter results later on Wednesday.