DEERFIELD, IL—Walgreens Boots Alliance, which operates 146 Walgreens stores in New Jersey, reported better than expected quarterly profit, although sales came up light.
The drugstore giant also extended its deadline to acquire Rite Aid, saying the $17 billion merger should close by January 27, 2017, rather than the end of this month, according to a news release.
If approved, the deal would yield the largest drugstore chain in the country.
However, amid worries the merger will not be approved by the Federal Trade Commission (FTC), which has been reviewing the acquisition, Walgreens says it “continues to expect that the most likely outcome will be that the parties will be required” to get rid of 500 to 1,000 U.S. stores.
And Walgreens "believes that it will be able to execute agreements to divest these stores to potential buyers, pending FTC approval, by the end of calendar year 2016,” said the drugstore chain in the release.
But on October 19, reports surfaced that Kroger, the country’s largest supermarket chain by revenue, may no longer buy hundreds of Walgreens and Rite Aid stores crucial to helping satisfy the FTC’s regulatory hurdle. The government wants as many as 650 stores divested.
Kroger would reportedly close the stores and reopen them in its own grocery outlets, but the FTC said no-go – they should remain “stand-alone stores,” an unnamed source told the New York Post.
“The FTC is trying to preserve … [the] stores,” said the source, asking: “What happens to Rite Aids it buys that are near Krogers?”
Though the FTC and Walgreens want to find “a remedy,” reports Reuters, if that's not possible, the FTC may file a lawsuit to trip-up the deal.
“A suit is not beyond the realm of possibility,” an unnamed source told Reuters.
Antitrust attorney, David Balto, told Reuters it’s not clear whether another supermarket outfit will consider purchasing stores.
"An acquisition (of the divested assets) by a supermarket would be a substantial challenge because it's outside their normal area of expertise," he told Reuters.
"Pharmacies are the most competitive part of the health care system. Because of that, acquiring pharmacies may not be that attractive [for a grocery operator].”
Walgreens has more stores in the U.S. than any other pharmacy. CVS is in second-place followed by Rite Aid.
The company said its sales rose 0.4% to $28.6 billion, while lower costs helped drive the fourth-quarter jump in profit.
While there are no Kroger grocery stores in the Garden State, the company owns 15 Littman Jewelers throughout Jersey.
The FTC and Walgreens declined comment.