Rite Aid & Albertsons to Merge to Better Meet Customers' Needs
BOISE, Idaho — The Albertsons Cos. and Rite Aid Corp. have formed an agreement under which the privately held grocer will merge with the publicly traded drug store chain. The transaction is expected to close during the second half of 2018.
Rite Aid Chairman and CEO John Standley will become CEO of the new entity, while Albertsons Cos. Chairman and CEO Bob Miller will serve as its chairman. The new organization is expected to comprise leadership from both companies and be based in Boise, Idaho, and Camp Hill, Pa., where Albertsons Cos. and Rite Aid, respectively, currently are based.
The new entity's board of directors will consist of four individuals to be named by Albertsons Cos., four named by Rite Aid and one jointly selected director. A majority of the board will be independent.
Under the terms of the agreement, in exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive either one share of Albertsons Cos. common stock plus approximately $1.83 in cash, or 1.079 shares of Albertsons Cos. stock.
Depending upon the results of cash elections, when the merger closes, shareholders of Rite Aid will own a 28-percent to 29.6-percent stake in the combined companies, and current Albertsons shareholders will own a 70.4-percent to 72-percent stake in the combined companies on a fully diluted basis.
Immediately following the merger's completion, if all Rite Aid shareholders elect to receive shares plus cash, Albertsons Cos. will have approximately 392.9 million shares outstanding on a pro forma and fully diluted basis. Following the close of the transaction and the share exchange, Albertsons Cos.' shares are expected to trade on the New York Stock Exchange.
According to the companies, the combined entity is intended to provide customers with flexible and convenient access to a full range of food, health and wellness offerings, and will deliver significant value to customers, employees, and shareholders by:
- Enhancing its geographic footprint and creating local networks in attractive geographies.
- Leveraging a strong pharmacy network and Rite Aid's pharmacy benefit management company, EnvisionRxOptions, to drive customer growth.
- Using data analytics and integrated loyalty programs to drive growth and target new customers.
- Combining strong own-brand portfolios with an extensive manufacturing and distribution network to drive revenue growth and operating efficiencies.
- Serving customers when, where and how they want to shop.
"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," Standley said. "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."
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 New York.
Camp Hill, Pa.-based Rite Aid is a leading drugstore chains that currently operates more than 4,500 stores in 31 states and Washington, D.C.
In 2017, Algreens Boots Alliance planned to purchase Rite Aid Corp. before the deal was called off following antitrust concerns from the FTC, as CSNews Online previously reported.
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