California Attorney General Rob Bonta has secured a sweeping settlement in the $24B Walgreens Conditions suit, placing strict terms on Sycamore Partners’ acquisition of Walgreens Boots Alliance Inc. The deal, unveiled Thursday after an extensive state review, aims to safeguard competition, patients, and pharmacy workers across the Golden State.

The agreement follows the official closing of Sycamore’s $24 billion takeover of Walgreens, a transaction involving nearly 450 California pharmacies. Without restrictions, regulators warned the merger could have fueled "pharmacy deserts" and left communities vulnerable.

Walgreens Bound by Seven-Year Conditions

Under the settlement, Walgreens must make every effort to keep California stores open, continue bargaining in good faith with labor unions, and avoid selling locations to the “Big 3” pharmacy benefit managers—CVS Caremark, Express Scripts, and Optum Rx. These conditions will remain binding for seven years, pending court approval.

Bonta emphasized the deal’s significance, calling it a safeguard against the alarming nationwide wave of pharmacy closures.

“This settlement is good news for Californians,” Bonta said. “Pharmacies are disappearing at an unprecedented rate, and with AB 853, we now have the authority to fight back against anti-competitive deals that threaten access to care.”

Protecting Patients, Workers, and Communities

The conditions also require Walgreens to continue participating in Medi-Cal and Medicare, provide financial assistance programs for patients, and adhere to state staffing requirements. The chain must give 90 days’ notice before closing or selling any store and maintain a preferential hiring list for displaced workers.

Walgreens also agreed to make commercially reasonable efforts to honor retirement contributions and unemployment benefits tied to collective bargaining agreements.

A Walgreens spokesperson welcomed the resolution, noting that it underscores the company’s independence and the crucial role its pharmacists play nationwide.

Industry Power and PBM Concerns

The settlement shines a spotlight on the dominance of pharmacy benefit managers. While PBMs were originally designed to negotiate fair drug pricing, regulators argue they have morphed into powerful middlemen reaping oversized profits while squeezing out community pharmacies.

As the last major nationwide pharmacy chain not tied to a PBM giant, Walgreens’ independence was central to California’s enforcement action.

Legal Counsel and Representation

California is represented by Rob Bonta, Neli Palma, and Emilio Varanini of the attorney general’s office. Walgreens is represented by Jenner & Block LLP, while Sycamore Partners is advised by Bass Berry & Sims PLC.