US drugstore chain Walgreens Boots Alliance announced Tuesday it would take over rival Rite Aid to strengthen its position as the country's second-largest pharmacy network.
Walgreens Boots will pay $9.4 billion in cash for Rite Aid. After acquired debt is included, the total value of the deal will hit $17.2 billion.
The deal will create a formidable challenger to US market leader CVS Health, though it could also raise antitrust questions about ongoing consolidation in the health care sector.
It will combine Walgreens Boots's 13,100 stores in a dozen countries, with sales of $76.4 billion in 2014, together with Rite Aid's 4,600 stores in the US and $26.5 billion in sales.
CVS, meanwhile, has more than 7,800 outlets in the United States with revenues of $139.4 billion in 2014.
Walgreens Boots will pay $9.00 a share in cash for Rite Aid, a 48 percent premium over the closing share price on Monday.
Rite Aid shares closed up 42.6 percent at $8.67 Tuesday, while Walgreens Boot shares added 6.4 percent to $95.16.
The announced deal comes less than a year after Italian billionaire Stefano Pessina led his Boots Alliance group into the hands of Walgreens in a $16 billion deal that left Pessina the chief executive of the combined group.
"Walgreens Boots Alliance will provide to Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care, and to offer innovative solutions for providers, payers and other entities in the US healthcare system," Pessina said in a statement.
"Our complementary retail pharmacy footprints in the US will create an even better network, with more health and wellness solutions available in stores and online."
As with CVS, the Walgreens Boots-Rite Aid tie-up is more than just stores dispensing prescription and non-prescription drugs, cosmetics and home goods through a large retail networks.
They also act as pharmacy benefit managers, the powerful middlemen between insurers, hospitals, drugmakers and patients in managing the distribution of drugs.
The deal gives Walgreens Boots a robust entrance into that business with Rite Aid, which took over a pharmacy benefits manager earlier this year.
Walgreens Boots already has one of the world's largest global pharmaceutical wholesale and distribution networks, with over 350 distribution centers serving over 200,000 pharmacies, doctors, health centers and hospitals in 19 countries.
The consolidation in the US industry has picked up pace over the past year, with the cost of debt to finance takeovers still very low and pressure to build scale and cut costs rising.
Walgreen's closed its $16 billion takeover of Boots only in December 2014 in a deal that involved substantial debt.
Two months later, Rite Aid paid about $2 billion from pharmacy benefits manager EnvisionRx.
CVS meanwhile in May paid $12.7 billion to buy Omnicare, which provides pharmacy-related services to long-term care facilities across the country.
And in June, CVS announced the $1.9 billion purchase of 1,660 pharmacies located inside Target department stores, and agreed to jointly develop more with the huge retailer.