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Walgreens takeover of Rite Aid could mean better deals from drugmakers

Walgreens, which has brokered a $9.41 billion deal to buy rival Rite Aid, is expected to flex its beefed-up negotiating muscle to twist better deals from drugmakers and other suppliers. But experts say those discounts won't automatically trickle down to consumers.

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Charles Krupa/AP/File
A Walgreens retail store in Boston. Walgreens confirmed Tuesday, Oct. 27, 2015, that it will buy rival Rite Aid, creating a drugstore giant with nearly 18,000 stores around the world.
  • By Tom Murphy Associated Press

| Deerfield, Ill.

Walgreens will use its $9.41 billion takeover of rival Rite Aid to spread its philosophy on making drugstores destinations for customers looking to stay healthy or buy beauty products.

The nation's largest drugstore chain also is expected to flex its beefed-up negotiating muscle to twist better deals from drugmakers and other suppliers. But experts say those discounts won't automatically trickle down to consumers.

Customers, for the most part, may not see a huge impact, beyond some store closures and fewer brand choices after Walgreens Boots Alliance Inc. adds the nation's third-largest drugstore chain.

They also may see more clinics in Rite Aid Corp. stores and more products like vitamins and supplements as the sector continues to stretch well beyond simply filling prescriptions.

Walgreens Boots Alliance Inc. (WBA) on Wednesday reported fiscal fourth-quarter net income of $26 million, after reporting a loss in the same period a year earlier.

On a per-share basis, the Deerfield, Illinois-based company said it had net income of 2 cents. Earnings, adjusted for non-recurring costs and costs related to mergers and acquisitions, came to 88 cents per share.

The results beat Wall Street expectations. The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of 81 cents per share.

The largest U.S. drugstore chain posted revenue of $28.52 billion in the period, which did not meet Street forecasts. Eight analysts surveyed by Zacks expected $28.86 billion.

For the year, the company reported profit of $4.22 billion, or $4 per share. Revenue was reported as $103.44 billion.

Walgreens expects full-year earnings in the range of $4.25 to $4.55 per share.

Walgreens shares have risen 25 percent since the beginning of the year. The stock has risen 51 percent in the last 12 months.

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