Shares of Rite Aid jumped nearly 40 percent Tuesday afternoon on a report that it may be gobbled up in the next major acquisition by Walgreens, the biggest U.S. drugstore chain.
The Wall Street Journal said Walgreens Boots Alliance is in advanced talks to buy Rite Aid, which is based in Camp Hill, Pennsylvania. The deal would combine the largest and third-largest U.S. drugstore chains, based on store counts.
That tie-up would make one of the world’s largest pharmaceutical buyers even bigger at a time when other key health care players like insurers and drugmakers also are expanding through multi-billion dollar deals.
A combination with Rite Aid could give Walgreens additional purchasing power in negotiating prices with drug companies, a hot topic given the rapid rise in cost for some prescriptions. It also may provide a little more leverage for hashing out reimbursement terms with payers like health insurers, noted analyst Vishnu Lekraj, who covers the sector for Morningstar.
Adding Rite Aid’s 4,600 stores could help Walgreens lower price for its customers because its growing volume of prescriptions would put it in a better position in talks with drug providers.