Walgreens to acquire Rite Aid for $17.2 Billion

[Brandon]

CVS has fewer stores, but they'd still have more in revenue. Have to take mail order stuff into account, as that's 25% of the drug market. CVS has a slightly lower in-store prescription revenue than Walgreens, but their mail order business alone is much larger than the revenue of Rite Aid, giving CVS about 25% of the prescription market if all channels are taken into consideration. Walgreens and Rite Aid combined have 22%.

So we're going to have an ugly biopoly in terms of stores, especially in the NYC metro area, considering Walgreens already owns Duane Reade. Should be fun.

What would it matter with Rite Aid not being in a lot of areas anyway?  The competition would mainly be Walgreens, CVS, and Walmart (all three are in this area) against each other.

[cl94]

CVS has fewer stores, but they'd still have more in revenue. Have to take mail order stuff into account, as that's 25% of the drug market. CVS has a slightly lower in-store prescription revenue than Walgreens, but their mail order business alone is much larger than the revenue of Rite Aid, giving CVS about 25% of the prescription market if all channels are taken into consideration. Walgreens and Rite Aid combined have 22%.

So we're going to have an ugly biopoly in terms of stores, especially in the NYC metro area, considering Walgreens already owns Duane Reade. Should be fun.

What would it matter with Rite Aid not being in a lot of areas anyway?  The competition would mainly be Walgreens, CVS, and Walmart (all three are in this area) against each other.

Precisely. Walgreens doesn't have many locations where Rite Aid is strong. They intersect in the eastern Great Lakes, where we will see several store closings, and Rite Aid is so strong on the East Coast that the number of stores that will close is small compared to the number of Rite Aids. At least around here, most Walgreens locations are close to a Rite Aid, but there are 4x as many Rite Aids.

[hbelkins]

...Walgreens aren't in small towns around here. Rite Aids are.

Many smaller towns also have what I think are mom-n-pop pharmacies branded under the "Rexall" banner.

Rexall was (is) like IGA. Independently owned locations with common branding.

I didn't know there were still Rexall pharmacies. Rexall products are now carried by Dollar General.

[SP Cook]

Rexall was (is) like IGA. Independently owned locations with common branding.

I didn't know there were still Rexall pharmacies. Rexall products are now carried by Dollar General.

Rexall is complicated.    Today there are 3 unrelated Rexalls.

Originally Rexall was much like IGA.  Independent stores with a common generic brand.   Each independent pharmacist bought the rights to Rexall in his town, and they used their combined strength to deal with suppliers as a group and thus had a central warehouse.

They went broke in the 80s, and the brand name ended up in 3 different hands.

- In Canada, the name was bought by Katz, which is a big drug and medical device company, which brands its retail drug stores Rexall.  The NHL arena in Edmonton is the Rexall Place.

- In the USA, the name was bought by an outfit called Sundown, which used to be an Amway varriant (pryamid scheme) selling vitamins.   That outfit has tried to get away from the pyramid scheme model and go legit and liscensed the name "Rexall" to Dollar General Stores.

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia. 

[cl94]

Rexall was (is) like IGA. Independently owned locations with common branding.

I didn't know there were still Rexall pharmacies. Rexall products are now carried by Dollar General.

Rexall is complicated.    Today there are 3 unrelated Rexalls.

Originally Rexall was much like IGA.  Independent stores with a common generic brand.   Each independent pharmacist bought the rights to Rexall in his town, and they used their combined strength to deal with suppliers as a group and thus had a central warehouse.

They went broke in the 80s, and the brand name ended up in 3 different hands.

- In Canada, the name was bought by Katz, which is a big drug and medical device company, which brands its retail drug stores Rexall.  The NHL arena in Edmonton is the Rexall Place.

- In the USA, the name was bought by an outfit called Sundown, which used to be an Amway varriant (pryamid scheme) selling vitamins.   That outfit has tried to get away from the pyramid scheme model and go legit and liscensed the name "Rexall" to Dollar General Stores.

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia.

There are a handful left. Most are in the south and plains states, but the are some in California, Northeast, and Midwest as well.

[Duke87]

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia.

Sounds a lot like what happened with Howard Johnson's restaurants. It's been 30 years since any new franchise licenses have been granted and there is zero central brand control, but any franchisee who has been operating continuously under the name since then is permitted to continue doing so indefinitely. As of today there are only two left.
The difference with Rexall is the number remaining is much greater than two.

As for the Rite Aid - Walgreens Merger, I don't know that it will face all that much regulatory scrutiny since while it will reduce the number of major players in the brick and mortar drug store business to two, there is no particular product either of them sell which is not available from a much greater number of places. Prescription drugs can be obtained from many supermarkets and megastores, as well as mail order. Food and drinks can be obtained from grocery stores. Cosmetics can be obtained from any number of stores specializing in such. Toys from toystores and online, greeting cards from any number of other places, even things like bandaids and such are available in tons of other places.

Consider, as an example, that regulators had no issue with GameStop gobbling up EB Games, making them THE sole national chain dedicated to selling video games. Didn't matter because plenty of other retailers not explicitly dedicated to video games also sell them. If you want to buy video games but don't want to shop at GameStop, it's actually pretty easy to avoid doing. They may have a near-monopoly on a particular business model, but they don't have a near-monopoly on any given product or service.

[SteveG1988]

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia.

Sounds a lot like what happened with Howard Johnson's restaurants. It's been 30 years since any new franchise licenses have been granted and there is zero central brand control, but any franchisee who has been operating continuously under the name since then is permitted to continue doing so indefinitely. As of today there are only two left.
The difference with Rexall is the number remaining is much greater than two.

As for the Rite Aid - Walgreens Merger, I don't know that it will face all that much regulatory scrutiny since while it will reduce the number of major players in the brick and mortar drug store business to two, there is no particular product either of them sell which is not available from a much greater number of places. Prescription drugs can be obtained from many supermarkets and megastores, as well as mail order. Food and drinks can be obtained from grocery stores. Cosmetics can be obtained from any number of stores specializing in such. Toys from toystores and online, greeting cards from any number of other places, even things like bandaids and such are available in tons of other places.

Consider, as an example, that regulators had no issue with GameStop gobbling up EB Games, making them THE sole national chain dedicated to selling video games. Didn't matter because plenty of other retailers not explicitly dedicated to video games also sell them. If you want to buy video games but don't want to shop at GameStop, it's actually pretty easy to avoid doing. They may have a near-monopoly on a particular business model, but they don't have a near-monopoly on any given product or service.

And the two remaining Howard Johnson's are in name only. they are not allowed to use the original recipie cards.

[cl94]

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia.

Sounds a lot like what happened with Howard Johnson's restaurants. It's been 30 years since any new franchise licenses have been granted and there is zero central brand control, but any franchisee who has been operating continuously under the name since then is permitted to continue doing so indefinitely. As of today there are only two left.
The difference with Rexall is the number remaining is much greater than two.

As for the Rite Aid - Walgreens Merger, I don't know that it will face all that much regulatory scrutiny since while it will reduce the number of major players in the brick and mortar drug store business to two, there is no particular product either of them sell which is not available from a much greater number of places. Prescription drugs can be obtained from many supermarkets and megastores, as well as mail order. Food and drinks can be obtained from grocery stores. Cosmetics can be obtained from any number of stores specializing in such. Toys from toystores and online, greeting cards from any number of other places, even things like bandaids and such are available in tons of other places.

Consider, as an example, that regulators had no issue with GameStop gobbling up EB Games, making them THE sole national chain dedicated to selling video games. Didn't matter because plenty of other retailers not explicitly dedicated to video games also sell them. If you want to buy video games but don't want to shop at GameStop, it's actually pretty easy to avoid doing. They may have a near-monopoly on a particular business model, but they don't have a near-monopoly on any given product or service.

And the two remaining Howard Johnson's are in name only. they are not allowed to use the original recipie cards.

Where the hell is that stated? The difference is that the food isn't mass-produced and frozen anymore.

[SteveG1988]

- But, anybody who was a "Rexall" when they went under in 1985 still owns the name in his town.  They can keep on being "Rexall" in their town for as long as they want to.  There are dozens of Rexalls around the country, unrelated to one another, or to Katz or Sundown.  While they can call themselves "Rexall" there is no longer a central buying deal, so you won't find Rexall products there.   There is a Rexall like this in Bluefield, Virginia.

Sounds a lot like what happened with Howard Johnson's restaurants. It's been 30 years since any new franchise licenses have been granted and there is zero central brand control, but any franchisee who has been operating continuously under the name since then is permitted to continue doing so indefinitely. As of today there are only two left.
The difference with Rexall is the number remaining is much greater than two.

As for the Rite Aid - Walgreens Merger, I don't know that it will face all that much regulatory scrutiny since while it will reduce the number of major players in the brick and mortar drug store business to two, there is no particular product either of them sell which is not available from a much greater number of places. Prescription drugs can be obtained from many supermarkets and megastores, as well as mail order. Food and drinks can be obtained from grocery stores. Cosmetics can be obtained from any number of stores specializing in such. Toys from toystores and online, greeting cards from any number of other places, even things like bandaids and such are available in tons of other places.

Consider, as an example, that regulators had no issue with GameStop gobbling up EB Games, making them THE sole national chain dedicated to selling video games. Didn't matter because plenty of other retailers not explicitly dedicated to video games also sell them. If you want to buy video games but don't want to shop at GameStop, it's actually pretty easy to avoid doing. They may have a near-monopoly on a particular business model, but they don't have a near-monopoly on any given product or service.

And the two remaining Howard Johnson's are in name only. they are not allowed to use the original recipie cards.

Where the hell is that stated? The difference is that the food isn't mass-produced and frozen anymore.

I read it somewhere, it's due to the whole "you can keep using the name" kind of thing. Like how there are some West Coast Video stores around, despite the entire chain going under. FAI owned the resturants, never expanded the chain.

http://www.foxnews.com/travel/2015/04/29/golden-years-for-orange-roof-last-2-howard-johnson-restaurants-soldier-on/

"The Wyndham Hotel Group has rights to the name that still graces more than 400 Howard Johnson hotels (without the "s'') worldwide. In contrast, the number of restaurants has been steadily dwindling for decades. Wyndham allows remaining restaurants to use the brand name based on grandfathered contracts."

"That means LaRock's restaurant is like a HoJo's hologram. It has the famous name and the orange roof, but no traditional franchise relationship. The menu evokes HoJo's heritage, but it's his creation. The ice cream is from a company in Maine. LaRock serves 12 flavors."

[doorknob60]

In the Northwest, Walgreens and Rite Aid are both quite popular. Never seen a CVS around these parts. For example, Bend has 2 Walgreens (both just recently opened actually) and 2 Rite Aids. Now all 4 will be owned by the same company, with no direct competitors (though Safeway, Wal-Mart, Fred Meyer, etc. do have pharmacies). Similar to the Albertson's Safeway merger. In Bend, there are 3 Safeways and there was 2 Albertson's. After the merger, both Albertson's stores were forced to be sold to another company, to avoid having 5 grocery stores owned by the same company in Bend. I wonder if a similar situation will happen here.

[Pink Jazz]

In the Northwest, Walgreens and Rite Aid are both quite popular. Never seen a CVS around these parts. For example, Bend has 2 Walgreens (both just recently opened actually) and 2 Rite Aids. Now all 4 will be owned by the same company, with no direct competitors (though Safeway, Wal-Mart, Fred Meyer, etc. do have pharmacies). Similar to the Albertson's Safeway merger. In Bend, there are 3 Safeways and there was 2 Albertson's. After the merger, both Albertson's stores were forced to be sold to another company, to avoid having 5 grocery stores owned by the same company in Bend. I wonder if a similar situation will happen here.

Perhaps that may be an area where divestitures may be required.  CVS could consider acquiring some of those locations.

[mrsman]

In the Northwest, Walgreens and Rite Aid are both quite popular. Never seen a CVS around these parts. For example, Bend has 2 Walgreens (both just recently opened actually) and 2 Rite Aids. Now all 4 will be owned by the same company, with no direct competitors (though Safeway, Wal-Mart, Fred Meyer, etc. do have pharmacies). Similar to the Albertson's Safeway merger. In Bend, there are 3 Safeways and there was 2 Albertson's. After the merger, both Albertson's stores were forced to be sold to another company, to avoid having 5 grocery stores owned by the same company in Bend. I wonder if a similar situation will happen here.

I agree.  I was living in Northern California at the time of the Albertsons Lucky merger in the late 90's.  To introduce competition, they had to sell an old store in the town I was living in to a competitor.  The store became Ralphs, its first foray into Northern California.

Most of the Rite Aids in Southern California were once Thrifty Drugs.  They had very good ice cream.  Apparently, Rite Aid has kept selling Thrifty ice cream at former Thrifty stores.  There is a movement to encourage Walgreens to continue to do that.  See the link below:

http://militantangeleno.blogspot.com/2015/10/savethriftyicecream.html

[tolbs17]

Now that Rite Aid has pulled out of the Southeast, I wonder what's left for them in the west and the Northeast regions. This show has gone crazy when Walgreens bought Rite Aid and all the stores here shut down

I know in Greenville NC, there's only 1 vacant Rite Aid left.

When all the Rite Aids closed down, 2 of them became Walgreens, followed by another one which Dollar General relocated into, another one became Dollar Tree, another one became ACE Hardware.

[Bruce]

Given that Rite Aid bought up a large Seattle-area chain (Bartell Drugs) last year, I think they're here to stay in the Northwest.

[jp the roadgeek]

There's both in my area, although the two Rite Aids in my town are long gone (one was outdated and a half mile from a 2005 vintage Walgreens, the other was newly built and while on the same road, was 3 miles from Walgreens locations in either direction.  The latter will soon be demolished to make way for a new concept 7-11, while the former became a medical arts building).  There are a few Rite Aids left, most of which are in towns without a Walgreens location.

[hbelkins]

After several months of our local store being a Walgreens, I must say I preferred Rite Aid.

[vdeane]

Given that Rite Aid bought up a large Seattle-area chain (Bartell Drugs) last year, I think they're here to stay in the Northwest.

Rite Aid still exists?  I thought they were bought out and any remaining locations are just awaiting conversion or closure.

[Takumi]

Given that Rite Aid bought up a large Seattle-area chain (Bartell Drugs) last year, I think they're here to stay in the Northwest.

Rite Aid still exists?  I thought they were bought out and any remaining locations are just awaiting conversion or closure.

It ended up that Walgreens only bought half of Rite Aid. Some of the Rite Aids around Richmond became Walgreens, mainly in areas where another Walgreens wasn't nearby but a CVS was.

[tolbs17]

Now I see some Walgreens stores not even a mile away from each other.

[kkt]

Rite Aid just bought out Bartell Drugs maybe 6 months ago.

Bartell's was a local chain and I'd rather they'd have stayed independent.  The printers for the prescription bottles were all changed, and the motivating factor seems to be to increase sales of reading glasses:  the new print is about 8 point.

[Bruce]

Apparently the conversion of Bartell to a Rite Aid subsidiary (which will keep its original branding but stock Rite Aid products) was botched when it came time to transfer prescriptions and the like.

Rite Aids are pretty plentiful in the Northwest thanks to their 1996 acquisition of Thrift PayLess, which had 1,000 locations at the time. Many of those have stayed as Rite Aids all the way into this decade, and will likely stick around given that most are being refreshed with the new logos and interior branding. Hard to imagine they'd go that far for stores that were about to close.

[steviep24]

Rite Aid on the left, Walgreens on the right. Amazing both are still open being across the street from each other.

https://www.google.com/maps/@43.1200567,-77.8053974,3a,75y,320.29h,90t/data=!3m6!1e1!3m4!1sQPcyKPRebF9Q6SIq-kU9Hw!2e0!7i13312!8i6656?hl=en&authuser=0

Interestingly, a Walgreens a few miles from this location closed due to low performance, perhaps due to a Wegmans and Target being across the street from it.

[catch22]

Out of the 4 Rite Aid stores near me, 2 closed as a result of the sale to Walgreens. One is now a plasma donor center, and the other is a lawn and garden equipment store.  The 2 that survived seem to be doing OK.  One is directly across the street from a Walgreens.  I'm really surprised this store did not close but it seems to be holding its own; the interior was recently refreshed and their new logo added to the outside.

Here is a GSV link showing the Walgreens, pivot around to see the Rite Aid:

https://goo.gl/maps/X9zfqjteZ5qdwreb6