Boise, Idaho — Boise, Idaho-based grocery chain Albertsons Cos. has agreed to acquire Rite Aid Corp., one of the nation’s largest drugstore chains, for an undisclosed sum. The integrated company will operate about 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington, D.C., serving more than 40 million customers per week.
The majority of Albertsons’ pharmacies will be rebranded as Rite Aid. The company will continue to operate Rite Aid standalone pharmacies.
The Rite Aid merger will allow Albertsons to go public. The combined company plans to seek expanded opportunities in Albertsons’ many brands, including O Organics and Lucerne, along with its manufacturing and operating capabilities. Rite Aid brings its own health and wellness brands to the table, including B4Y and Daylogic. Its pharmacy expertise will allow the combined company to drive growth opportunities and efficiencies across its purchasing, marketing, manufacturing and merchandising functions, according to Rite Aid.
“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 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.”
On a pro forma basis, the combined company is expected to generate year-one revenues of about $83 billion.
The board of directors will be composed of nine directors: four from Albertsons, four from Rite Aid and one jointly selected director. The boards of directors of both companies have approved the transaction unanimously. The merger is expected to close early in the second half of 2018, subject to the approval of Rite Aid’s shareholders, regulatory approvals and other customary closing conditions.
Credit Suisse and Goldman Sachs & Co. LLC served as lead financial advisors to Albertsons, while Schulte Roth & Zabel LLP acted as legal advisor. Bank of America Merrill Lynch also served as financial advisor to Albertsons and is providing committed financing for the proposed transaction together with Credit Suisse and Goldman Sachs. Citi served as exclusive financial advisor to Rite Aid, while Skadden, Arps, Slate, Meagher and Flom LLP acted as legal advisor.
Albertsons is one of the largest food and drug retailers in the United States, with stores across 35 states and the District of Columbia under 20 brands, 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 City.
— Nellie Day