Walgreens Boots Alliance has announced a definitive agreement to acquire Rite Aid, in a $17.2-billion deal that’s expected to close in the second half of 2016.

The transaction has been approved by both boards of directors and is subject to approval by holders of Rite Aid's common stock. The acquisition is expected realize synergies of roughly $1 billion in the first full year after completion.

"In both mature and newer markets across the world, our approach is to advance and broaden the delivery of retail health, wellbeing and beauty products and services," says Stefano Pessina, executive vice chairman and ceo, Walgreens Boots Alliance. "This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients. Our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online."

Rite Aid will become a wholly-owned subsidiary of the Walgreens Boots Alliance, which is planning to help transform Rite Aid stores to better meet consumer needs.

In line with its commitment to accessible, affordable, quality healthcare in the United States, Walgreens Boots Alliance will provide Rite Aid with the expertise and resources to accelerate the delivery of integrated frontline care and to offer solutions for providers and payers of the healthcare system, says Pessina.

"This transaction is a testament to the hard work of all our associates to deliver a higher level of care to the patients and communities we serve," says John Standley, chairman and ceo, Rite Aid. "Together with Walgreens Boots Alliance, the Rite Aid team can continue to build upon this great work through access to increased capital that will enhance our store base and expand opportunities as part of the first global pharmacy-led, health and wellbeing enterprise." 

Rite Aid is expected to keep operating under its existing name. Over time, however, the two companies will integrate to create a harmonized portfolio of stores and infrastructure.

Walgreens Boots Alliance is the first global pharmacy-led, health and wellbeing enterprise. The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years.