Walgreens secures financing for proposed Rite Aid acquisition

In moving forward with its plan to purchase Rite Aid, Walgreens Boots Alliance said Monday it has finished the placement of $12.8 billion term loan and bridge facilities.

The financing features $5 billion of term loan facilities and a $7.8 billion term loan bridge facility. The $5 billion will be given in two even portions with one having a three-year maturity and the other having a five-year maturity.

George Fairweather, executive vice president and global chief financial officer of Walgreens, said the term loan facilities represent a milestone in securing permanent financing for the company's proposed acquisition of Rite Aid. Walgreens, the nation's largest drugstore chain, announced its plan to buy the third-largest drugstore chain in late October.

The Walgreens-Rite Aid deal is expected to close by the middle of next year and must still be approved by Rite Aid stakeholders as well as meet numerous customary closing conditions. Under the acquisition, Rite Aid would become a wholly owned subsidiary of Walgreens and will initially operate under its existing brand name.

“We are very pleased with the high level of interest and support from our banking partners, which resulted in the oversubscription of the transaction," Fairweather said. "The $5 billion pre-payable term facilities provide us with diversification of funding sources and the flexibility to reduce leverage over time.”