Walgreens has cancelled its deal to buy Rite Aid and replaced it with a new agreement.
Walgreens will purchase 2,186 stores, three distribution centers and related inventory from Rite Aid for $5.18 billion in cash. Walgreens won’t assume any debt from Rite Aid in this deal.
Walgreens CEO Stefano Pessina said the new deal would allow the company to make its stores more efficient, with a goal of wringing out $400 million in annual “synergies.”
Walgreens has also terminated a related deal to sell 865 Rite Aid stores to Fred’s.
Walgreens made an initially offer to buy Rite Aid for $9.5 billion in 2015, but the deal failed to be approved by federal regulators, who worried that a merger between the two would lead to a monopoly, according to CNBC .
The new deal is expected to close by year-end and the Rite Aid stores will be converted into Walgreens stores.
Rite Aid, which currently has about 4,600 locations, is selling stores primarily located in the Northeast, mid-Atlantic and southeastern U.S. CVS has more than 9,600 stores.