Walgreens Boots Alliance has agreed to buy its rival Rite Aid in a $17.2 billion all-cash deal.

If approved by regulators, the deal would see two of the biggest US drug stores combined.

Walgreens Boots Alliance was created when UK-based Alliance Boots merged with Walgreens in 2014.

Rite Aid is expected to initially continue operating under its own name.

The Pennsylvania-based company, which has been in operation since 1962, saw its shares soar more than 40% on October 27 after the Wall Street Journal reported that a deal may be in the wings.

Photo Fox Business

Walgreens Boots Alliance said Rite Aid shareholders would receive $9 per share under the deal. Both companies said the transaction was expected to be completed half way through 2016.

Walgreens Boots Alliance said it expected to finance the transaction “through a combination of existing cash, assumption of existing Rite Aid debt and issuance of new debt”.

“Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy,” said CEO Stefano Pessina.

Rite Aid CEO John Standley said the deal would deliver “significant value” to the company’s shareholders. The retail chain has some 4,600 stores across the US and is the largest drugstore chain on the East Coast.

Walgreens Boots Alliance already employs more than 370,000 people and has a presence across some 25 countries. Walgreens is set to release its fourth quarter results on October 28.