California Attorney General Rob Bonta has announced a settlement agreement with Walgreens Co. and its future owner, Sycamore Partners Management, L.P., to ensure continued pharmacy services across California. The settlement follows Walgreens’ announcement on March 6, 2025, that it would be acquired by the private equity firm Sycamore. The transaction involves more than 450 Walgreens stores in the state.
The agreement addresses concerns about potential increases in pharmacy deserts, which could affect workers and patients who rely on Walgreens for essential services. These patients include low-income individuals, elderly residents, people living in rural areas, and people of color.
The settlement was reached under Assembly Bill 853 (AB 853), which took effect on October 8, 2023. AB 853 requires notice and review by the Attorney General for transactions involving retail pharmacies and grocery stores to assess impacts on access and labor.
Attorney General Bonta stated: “The settlement we have reached with Walgreens and Sycamore is good news for Californians. At its core, it ensures that the California Walgreens stores remain open and continue providing vital services in our communities. Across the country, pharmacies are closing in alarming numbers. Thanks to AB 853, my office has the power to address the competition harms posed by transactions involving retail pharmacies and grocery stores, and we are not letting that authority go unused.”
Walgreens is currently the last independent nationwide pharmacy chain not owned by one of the three largest Pharmacy Benefit Managers (PBMs): CVS Caremark, Optum Rx, or Express Scripts.
As part of the settlement’s terms for seven years:
– Walgreens and Sycamore must use best efforts to keep all existing California Walgreens stores open.
– They must provide at least 90 days’ notice before selling or closing any store.
– They are prohibited from reselling any California store to any of the Big Three PBMs.
– They cannot use dividend recapitalization or profit distributions if these actions would likely harm operations.
– They must continue participating in Medi-Cal and Medicare where possible.
– Efforts should be made to offer financial assistance to patients.
– Compliance with state staffing levels is required.
– Employees from closed stores will be placed on a hiring list for preferential consideration at other locations.
– Retirement contributions must be paid as required by collective bargaining agreements.
– Laid-off employees will not have their unemployment claims contested if no nearby job is available.
– Good faith bargaining with unions is expected.
– Nondiscrimination rules must be followed when providing healthcare services.
This is Attorney General Bonta’s second settlement under AB 853; his first was with Rite Aid on August 19, 2024. In April 2025, Bonta joined a bipartisan group of attorneys general urging Congress to pass legislation prohibiting PBMs or their affiliates from owning or operating pharmacies.
The Healthcare Rights and Access Section within the California Department of Justice monitors healthcare transactions such as this one to protect affordability and accessibility statewide. Their work includes overseeing nonprofit healthcare deals, consumer rights issues, anticompetitive consolidation concerns in healthcare markets, drug pricing matters, privacy topics, civil rights protections including reproductive rights and LGBTQ+ care issues, as well as public health work related to tobacco products.
A copy of the settlement documents can be found here.
