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Albertsons Companies agrees to merge with Rite Aid

RBR Staff Writer Published 21 February 2018

Idaho-based grocery retailer Albertsons Companies has entered into an agreement to merge with Rite Aid, a drugstore chain.

The combined entity is expected to provide customers with flexible and convenient access to a full range of food, health, and wellness offerings.

Under the terms of the agreement, Rite Aid shareholders can choose between receiving one share of Albertsons plus about $1.83 in cash and 1.079 shares of Albertsons for every 10 shares of Rite Aid.

Upon the closing of the merger, Rite Aid share shareholders will own between 28% and 29.6% of stake in the combined company, while current Albertsons’ shareholders will own between 70.4% and 72% of the stake.

The combined company will operate in about 4,900 locations, 4,350 pharmacy counters, and 320 clinics in 38 states and Washington, DC, claimed to be serving more than 40 million customers per week.

Albertsons plans to rebrand its pharmacies at Rite Aid and will also continue to operate Rite Aid stand-alone pharmacies.

Rite Aid’s current chairman and CEO John Standley will become CEO of the combined entity, with current Albertsons Companies chairman and CEO Bob Miller serving as chairman. The new company could have leadership from both companies and will have dual headquarters, one in Boise, Idaho and the other in Camp Hill, Pennsylvania.

The transaction is expected to bring in revenues of about $83bn and adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of about $3.7bn, Albertsons stated.

Subject to the approval of Rite Aid’s shareholders, regulatory approvals, and other customary closing conditions, the transaction is expected to close early in the second half of calendar year 2018.

Rite Aid chairman and CEO John Standley said: “This powerful combination enables us to become a truly differentiated leader in delivering value, choice, and flexibility to meet customers’ evolving food, health, and wellness needs.

“The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and enhance our pharmacy footprint. We are confident that delivering improved customer experiences and value will drive growth and profitability while creating compelling long-term value for shareholders.”

Image: Albertson’s store in Idaho. Photo: Courtesy of Caldorwards4/Wikipedia.org.