Union Speaks Out Against Walgreens-Rite Aid Deal
January 31 2017 - 5:47PM
Dow Jones News
By Sharon Terlep
A union representing 6,000 Rite Aid Corp. workers is opposing
the drugstore chain's proposed tie-up with Walgreens Boots Alliance
Inc., arguing the companies' efforts to address antitrust concerns
don't go far enough.
According to 1199SEIU United Healthcare Workers East, which says
it represents over 400,000 U.S. hospital, pharmacy and other
health-care workers, Walgreens's and Rite Aid's plan to sell at
least 865 stores to regional chain Fred's Inc., would leave the
U.S. drugstore market with too few competitors.
"Even with the proposed reduction, Walgreens's postmerger
increased market share will create conditions which are conducive
to abuse of power, and that will ultimately injure competition,
innovation, consumers and workers," Veronica Turner-Biggs, the
union's senior executive vice president, said in a letter to
Deborah Feinstein, head of the Federal Trade Commission's Bureau of
Competition.
Rite Aid and the FTC declined to comment. Walgreens and Fred's
weren't immediately available for comment.
Walgreens and Rite Aid have been trying to get the FTC to sign
off on the deal, struck in October 2015, and on Monday agreed to
consider selling more stores in an effort to satisfy
regulators.
Walgreens agreed to buy Rite Aid for $9 a share, or about $9.4
billion, to form a drugstore chain with more than 10,000 U.S.
stores. The antitrust concerns include that such a big company
could hold too much sway in negotiations with pharmacy-benefits
managers handling corporate and government drug plans.
Under new terms announced this week, the deal would value Rite
Aid between $6.8 billion and $7.4 billion, depending on how many
stores the two companies divest.
Ms. Turner-Biggs, in her letter, argued that even with the
additional 865 stores, Fred's would be too small to compete with
Walgreens or CVS Health Corp., another drugstore giant.
She said in an interview that the union decided to oppose the
deal after failing to win assurances from Rite Aid that the newly
combined company would commit to worker safeguards and restraint on
pricing. The union represents Rite Aid pharmacists, technicians and
cashiers at stores in the New York region.
The FTC has increased its scrutiny of buyers of divested assets
since 2015, when it allowed Safeway Inc. and Albertsons to merge
provided they sold 168 stores to a smaller grocery chain, Haggen
Holdings LLC. Haggen filed for bankruptcy protection months later,
prompting Albertsons to buy some of the divested stores back.
About 26% of Rite Aid workers are represented by a union,
according to the company. The SEIU affiliate doesn't represent
Walgreens workers.
The two companies have until the end of July to complete the
deal, after they extended the deadline earlier this week.
(END) Dow Jones Newswires
January 31, 2017 17:32 ET (22:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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