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Walgreens Boots Alliance and Rite Aid To Sell 865 Rite Aid Stores to Fred’s Pharmacy

Deerfield, Ill., and Camp Hill, Pa. — Walgreens Boots Alliance, Inc. and Rite Aid Corporation have agreed to sell 865 Rite Aid stores and certain assets related to store operations to Fred’s, Inc. for $950 million. The all-cash transaction is subject to Federal Trade Commission (FTC) approval, the approval and completion of the pending acquisition of Rite Aid by Walgreens Boots Alliance, and other customary closing conditions.

The agreement is being entered into to respond to concerns identified by the FTC in its review of the proposed acquisition of Rite Aid by Walgreens Boots Alliance, which was announced in October 2015. Walgreens Boots Alliance is actively engaged in discussions with the FTC regarding the transaction and is working toward a close of the Rite Aid acquisition in early 2017.

The proposed divestiture transaction, if approved, would establish Fred’s Pharmacy as one of the largest drugstore chains in the United States with significant presence in areas such as the South and on the East and West coasts. Specific locations of the stores to be divested will be announced upon FTC approval of the Walgreens Boots Alliance and Rite Aid merger.

Under the terms of the purchase agreement, Fred’s Pharmacy would acquire 865 Rite Aid stores and certain assets related to store operations, and expects to continue to employ all store associates and certain field and regional associates related to the operations of the acquired stores upon completion of the divestiture. Fred’s Pharmacy would continue to operate the acquired stores under the Rite Aid banner during a transition period. If the FTC requires divestiture of more than the 865 Rite Aid stores currently contemplated by the purchase agreement and Walgreens Boots Alliance agrees to sell such stores, the purchase agreement requires Fred’s to purchase such additional stores.

“We are pleased to have found an experienced pharmacy operator for these stores,” says Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance. “With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid.”

BofA Merrill Lynch acted as Walgreens Boots Alliance’s financial adviser, with Sidley Austin LLP acting as its legal counsel on transaction legal matters and Weil, Gotshal & Manges LLP acting as its legal counsel on antitrust regulatory matters.

Citi acted as Rite Aid’s exclusive financial adviser, with Skadden, Arps, Slate, Meagher & Flom LLP acting as Rite Aid Corporation’s legal counsel on transaction legal matters and Jones Day acting as its legal counsel on antitrust regulatory matters.

Walgreens Boots Alliance is the first global pharmacy-led, health and wellbeing enterprise. The company, which was created through the combination of Walgreens and Alliance Boots in December 2014, is a global leader in pharmacy-led, health and well-being retail and has more than 13,200 stores in 11 countries.

The company’s portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as health and beauty product brands, such as No7, Botanics, Liz Earle and Soap & Glory. For more information, visit www.walgreensbootsalliance.com.

Rite Aid Corporation is one of the nation’s leading drugstore chains with nearly 4,600 stores in 31 states and the District of Columbia and fiscal 2016 annual revenues of $30.7 billion. For more information, visit www.riteaid.com.

SOURCE: Walgreens Boots Alliance

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