Privately held Albertsons Companies will acquire publicly traded Rite Aid Corporation in what the companies termed a definitive merger agreement.
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 Companies common stock plus approximately $1.83 in cash or 1.079 shares of Albertsons Companies stock. Depending upon the results of cash elections, upon closing of the merger, shareholders of Rite Aid will own a 28% to 29.6% stake in the combined company, and current Albertsons Companies shareholders will own a 70.4% to 72% stake in the combined company.
Following the close of the transaction and the share exchange, Albertsons Companies’ shares are expected to trade on the New York Stock Exchange.
Current Rite Aid chairman and CEO John Standley will become CEO of the combined company, with current Albertsons Companies chairman and CEO Bob Miller serving as chairman. The combined company is expected to be comprised of leadership from both companies and will be dual headquartered in Boise, Idaho, and Camp Hill, Pennsylvania. The name of the combined company will be determined by transaction close.
The integrated company will operate approximately 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington, D.C. Most Albertsons Companies pharmacies will be rebranded as Rite Aid, and the company will continue to operate Rite Aid stand-alone pharmacies.
“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,” said Rite Aid’s Standley. “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.”
“The hallmark of Albertsons Companies’ business has been to become the favorite local supermarket of our customers,” said Albertsons’ Miller. “We have always put our customers first, and our combination with Rite Aid will enable us to even better serve the valuable pharmacy customer by providing a fully integrated one-stop-shop for our customers’ food, health, and wellness needs. I have long known the excellent management team at Rite Aid, and we share a singular focus on superior customer service and a clear vision and strategy to become the favorite local supermarket and pharmacy to shoppers in every neighborhood we serve.”
On a pro forma basis, the combined company is expected to generate year one revenues of approximately $83 billion.
The transaction has been approved unanimously by the boards of directors of both companies. The merger is expected to close early in the second half of calendar year 2018, subject to the approval of Rite Aid’s shareholders, regulatory approvals, and other customary closing conditions.
Just last year, under an asset purchase agreement, Walgreens purchased a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.38 billion.