Walgreens substantially lowered its offering price for drugstore rival Rite Aid and, facing resistance from U.S. regulators, raised the number of stores it would be willing to unload to ease monopoly concerns.
The companies initially expected to sell no more than 500 stores, but that was pushed to 1,200 under the new terms announced Monday.
The new offer for Rite Aid is between $6.50 and $7 per share, depending on how many stores need to be divested. When the deal was first announced in late 2015, Walgreens bid $9 per share, roughly $9.4 billion, for the nation's third-largest drugstore chain.
The lower price range would cut the deal's new value to between $6.84 billion and $7.36 billion, based on Rite Aid's roughly 1.05 billion outstanding shares.
The deadline to complete the deal, which had already been extended once and expired last week, was pushed back to the end of July.
Shares of Rite Aid Corp. tumbled more than 17 percent to $5.74 in midday trading Monday.
The combination of Walgreens and Rite Aid would create a drugstore giant with more than 11,000 stores nationally, even with the sale of more than a thousand stores. That's a few thousand more than nearest competitor, CVS Caremark Crop.
Rite Aid, based in Camp Hill, Pennsylvania, runs nearly 4,600 drugstores. The addition of its locations is expected to give Walgreens more negotiating muscle with drugmakers and other suppliers and to grow its presence in the Northeast and Southern California.
Walgreens also has a sizeable overseas presence, especially in the United Kingdom. It currently runs more than 13,000 stores in 11 countries, including 8,175 in the United States.
Walgreens said last December — more than a year after announcing the Rite Aid deal — that it would sell 865 stores to rival retailer Fred's for $950 million due to concerns raised by federal anti-trust regulators.
A Walgreens spokesman said Monday that the company still has an existing deal with Fred's, but he declined to comment on whether that company had agreed to buy more stores or if another potential buyer had emerged.
Under the revamped deal, Walgreens, based in Deerfield, Illinois, will pay $6.50 per share for Rite Aid if it is required to divest 1,200 stores. The price rises to $7 per share if 1,000 or fewer are required.
Walgreens executives told analysts earlier this month that they still expected to close the deal. Executive Vice Chairman and CEO Stefano Pessina said Walgreens had a "very good" relationship with Federal Trade Commission representatives, and the company wasn't thinking of alternatives to the deal.
"We are working hard to have this deal approved and for the time being we don't want to even think that the deal could not be approved after so many months," he told analysts during a Jan. 5 conference call to discuss earnings.
Major deals have come under tough scrutiny because of the potential impact on consumers.
Last week, a federal judge rejected Aetna Inc.'s $34 billion bid for rival Humana Inc. on competitive grounds. The Department of Justice sued last summer to block that deal and a separate insurance acquisition, Anthem Inc.'s $48-billion purchase of Cigna Corp.
Walgreens also said Monday that it lowered the top end of its 2017 earnings forecast by 12 cents per share to account for the deal delay. Walgreens now forecasts adjusted earnings to range between $4.90 and $5.08 per share.
Analysts expect, on average, $5.02 per share, according to FactSet.
Shares of Fred's Inc. rose 3 percent to $14.55, while Walgreens Boots Alliance Inc. slipped 20 cents to $81.30, as broader indexes also fell.