Potential Walgreens and Rite Aid Merger Could Lead to Unemployment

Giant drugstore company Walgreen's $17.2 billion acquisition of the East Pennsboro-based Rite Aid may potentially lead to more unemployment with the possibility of Rite's central headquarters being moved from Pennsylvania.

Penn Live reported that Rite Aid Corp has been key in the development of Central Pennsylvania, providing good jobs, community donations, local taxes, and regional business development marketing. Now, news of Walgreens' takeover of the company shocked the community. Many are worried about what would happen to Rite Aid's central Pennsylvania headquarters and all its workers when the company is acquired. There are no assurances that its central headquarters will still be located in the same place. Walgreens and Rite Aid did not give ample information about what would happen to the headquarters and its employees. However, there is much speculation that what Walgreens calls "synergies" would mean cutting costs and fewer jobs.

NPR writes that Walgreens agreed to buy Rite Aid October 27 for $9 a share. This would help Walgreens expand geographically, creating a single brand with Rite Aid's 13,100 stores in 11 countries. Walgreen Boots Alliance CEO Stefano Pessina said the merger "is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy."

"What they're (federal regulators) going to look for, ultimately, is will consumers suffer because of higher prices or worse service because of the transaction?" former Federal Trade Commission official David Balto said. "These two firms are very aggressive competitors, and in the markets where they meet, it really makes a big headache for consumers. Permitting this merger would be a tremendous headache for consumers. They're going to suffer in their pocketbook."

Walgreens Boots Alliance expects the deal to be accretive to its earnings in its first year as a single company, allowing Rite Aid to reinvest in stores that brings sustainable growth, according to Financial Spots.

Meanwhile, Walgreens Boots Alliance and Rite Aid will still use their names for a while. The companies announced that the merger will be completed by 2016.