Economy

Rite Aid to be acquired by Albertsons

Rite Aid to be acquired by Albertsons

As of February 8, Rite Aid had transferred more than half of those stores - 1,114 - to Walgreen and said it expected to complete the process by spring.

The board of directors will be comprised of nine directors, with four each to be named from Albertsons Companies and Rite Aid. A debt-laden distant third behind Walgreens and in the prescriptions market, Rite Aid has a market share only one third that of either rivals, according to Pembroke Consulting.

Miller would serve as chairman of the combined company, and John Standley, the Rite Aid chairman and chief executive officer, would remain as CEO.

Under the deal, the combined company is expected to be comprised of leadership from both companies and will be dual headquartered in Boise, Idaho, and Camp Hill. The name of the combined company will be determined by transaction close. Albertsons CEO Bob Miller will become chairman. "The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and exchange our pharmacy footprint". Most of the Albertsons pharmacies will be rebranded as Rite Aid, and the company will continue to operate standalone Rite Aid pharmacies. (The one exception is Jewel Osco in Chicago, a spokeswoman for Albertsons said.) So Texas consumers in several markets will have another national pharmacy brand to choose from, in addition to Walgreens and CVS, that can leverage a pharmacy benefit management company behind it. Rite Aid's is called EnvisionRxOption.

The companies said the combination is expected to leverage a strong pharmacy network and Rite Aid's PBM, EnvisionRxOptions, to drive significant customer growth.

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The business of distributing and selling medicine is undergoing major changes as well, with the nation's largest operators of pharmacies pursuing mergers aggressively to control costs and increase profits. The Company's Retail Pharmacy segment consists of Rite Aid stores, RediClinic and Health Dialog.

The companies expect their combined entity to trade on the New York Stock Exchange. Standley explains that the merger will strengthen both companies' positions on the West Coast and in the Northeast. Finally, Royal Bank of Canada set a $2.00 price objective on Rite Aid and gave the company a "hold" rating in a report on Wednesday, October 25th. Rite Aid brings its own health and wellness brands to the table, including B4Y and Daylogic.

Rite Aid shareholders can choose to be paid all in stock or a combination of stock and cash. Shareholders of Boise, Idaho-based Albertsons, which is now private held, will own more than 70 percent of the combined company. Oppenheimer & owns 0.01% invested in Rite Aid Corporation (NYSE:RAD) for 113,786 shares.

For Albertsons, the deal is yet another transformative purchase put together by its private equity parent Cerberus Capital Management. Albertsons even has launched a digital platform created to give CPG brands access to shopper data to help them deliver targeted ad campaigns, showing that it is very serious about engaging consumers at all points of the shopper journey.


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