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Walgreens calls off Rite Aid merger, strikes new deal: 6 takeaways

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Deerfield, Ill.-based Walgreens Boots Alliance and Camp Hill, Pa.-based Rite Aid terminated their proposed merger agreement Thursday after nearly two years of negotiations, according to The New York Times.

Here are six things to know.

1. While the organizations called off their original deal, they inked a new agreement. Under the new transaction, Rite Aid will sell 2,186 stores and three distribution centers to Walgreens for $5.18 billion.

"We believe this new transaction addresses competitive concerns previously raised with respect to the prior transaction and will streamline and simplify the transition for customers, team members and other stakeholders," said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina.

2. Rite Aid will also receive a $325 million termination fee.

3. The new agreement annuls both the proposed Walgreens-Rite Aid merger and the proposed sale of some of Rite Aid's assets to Fred's, a pharmacy chain in Memphis, Tenn.

Walgreens and Rite Aid introduced the proposed transaction with Fred's to satisfy antitrust concerns raised by the Federal Trade Commission. The organizations also amended their original agreement in January to garner regulatory approval.

4. Officials said the companies ended negotiations following significant pushback from antitrust regulators who claimed the proposed merger would diminish competition in the drugstore industry. Prior to ending negotiations, Mr. Pessina and Rite Aid Chairman and CEO John Standley expressed their optimism regarding the FTC's review.

5. The companies agreed to merge in October 2015. Had the transaction been approved, Walgreens and Rite Aid would have owned more than 8,000 stories across the U.S., Puerto Rico and the Virgin Islands, surpassing the biggest pharmacy chain in the nation, Woonsocket, R.I.-based CVS Health, according to the report.

6. Rite Aid shares tumbled more than 11 percent to $3.52 per share in premarket trading following the companies' announcement, according to the NYT report.

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