Walgreens, a unit of Walgreens Boots Alliance (WBA) and Fred’s Inc. (FRED) entered into an agreement under which the former will buy the patient prescription files of 185 stores from the latter. This deal will help Walgreens to have a strong presence across the ten Southeastern states in the US. As per the deal terms, the Deerfield, Illinois-based drugstore will pay $165 million to Fred’s.
The Memphis, Tennessee-based company has been exploring strategic transactions and looking for potential buyers to trim its store count in retail pharmacy business for quite some time. In the first quarter, Fred’s closed the sale of its specialty pharmacy business and classified this business as discontinued operations.
After this deal gets sealed, Fred’s will proceed to run its remaining retail stores of around 162 pharmacies across 600 stores. The staffs from these closing stores can apply for available positions in Walgreens stores. The pharmacy file transactions are estimated to commence in the final quarter of this calendar year and conclude in the first quarter of the next calendar year.
“This agreement increases patient access to Walgreens pharmacies in the Southeastern U.S., and allows us to introduce more people to Walgreens trusted pharmacy services in these communities,” said Richard Ashworth, Walgreens President of Operations.
Walgreens, which failed to acquire its rival Rite Aid (RAD) due to the resistance from federal regulators, announced in January 2018 that it would acquire 1,932 Rite Aid stores for $4.38 billion by the spring of 2018.
On the back of this buyout news, Fred’s shares surged more than 60% during the premarket trading today and continued the positive momentum in the morning trading session, while Walgreens Boots Alliance stock was trading up about 1%. Fred’s stock has plunged about 36% so far this year and 63% in the past 12 months.