Albertsons-Rite Aid Merger Shakes Up Both Grocery And Pharmacy Sectors

A woman pushes a cart of groceries to her car outside an Albertson's store in Denver Colorado

Rite Aid Corporation (NYSE:RAD) Jumps 23.47% Tuesday's Pre-market after Takeover News

ING Groep NV lowered its stake in shares of Rite Aid Co.

Graham said customers don't have to transfer their prescriptions to Walgreens, and they can continue to refill them at Rite Aid.

Albertsons owns about 2,300 supermarket stores mainly on the east and west coasts of the United States and also operates about 1,800 pharmacies. "Taking care of customers and patients is a top priority". Zacks Investment Research raised shares of Rite Aid from a "sell" rating to a "hold" rating in a report on Friday, November 17th.

Boise-based Albertsons Cos. operate stores across 35 states and Washington, D.C., under 20 banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs, as well as meal kit company Plated based in NY.

"The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and enhance our pharmacy footprint", Standley said in a statement issued with the announcement. This will be achieved through a full suite of health and wellness capabilities, including specialty pharmacy offerings and in-store RediClinics in larger Albertsons Cos. stores and stand-alone Rite Aid In addition, investing in preferred relationships with EnvisionRxOptions, other PBMs, and regional payors is expected to drive prescription growth. Rite Aid shareholders would own 28 to 30 percent percent of the combined company. Schwab Charles Investment Management Inc. grew its stake in shares of Rite Aid by 34.2% during the third quarter. A combined name and rebranding will be announced when the transaction closes.

"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", says John Standley, Rite Aid chairman and CEO.

The board of directors will be composed of nine directors: four from Albertsons, four from Rite Aid and one jointly selected director. The transaction is expected to close during the second half of 2018. As per Thursday, October 29, the company rating was downgraded by Credit Suisse. LLC served as lead financial advisors to Albertsons, while Schulte Roth & Zabel LLP acted as legal advisor.

For Albertsons, the deal is yet another transformative purchase put together by its private equity parent Cerberus Capital Management.

Cerberus had tried to bring Albertson's public in 2015, but was unsuccessful.

Immediately following completion of the merger, Albertsons will have approximately 392.9 million shares outstanding on a pro forma and fully diluted basis. But it also shrank Rite Aid so dramatically at a time the pharmacy industry is only getting more competitive, giving large companies more clout to negotiate with drugmakers and other suppliers.

While looking at the Stock's Performance, Rite Aid Corporation now shows a Weekly Performance of 10%, where Monthly Performance is -4.76%, Quarterly performance is 42.86%, 6 Months performance is -0.9% and yearly performance percentage is -62.96%.

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