Safeway parent Albertsons to buy what's left of Rite Aid

Ivan Schwartz
February 21, 2018

Rite Aid will get a buyer after a failed merger with another chain previous year.

Grocer Albertsons will buy drugstore chain Rite Aid in a deal that would accelerate the remaking of the US retail and health-care industries.

Together, the combined company will operate about 4,350 pharmacy counters and 320 clinics across 38 states and Washington.

Albertsons Companies has said the Rite Aids will continue to be stand-alone stores, and most of Albertsons grocery stores will see their pharmacies rebranded as Rite Aids. Last September, Walgreens agreed to buy almost 2,000 Rite Aid locations and some distribution centers for about $4.38 billion.

Retailers have been under growing pressure from online competitors such as Seattle-based Amazon.com Inc., and the corner drugstore has been no exception.

This deal also positions Albertsons to battle Amazon and Walmart.

The business of distributing and selling medicine is undergoing major changes as well, with the nation's largest operators of pharmacies pursuing mergers aggressively to control costs and increase profits.

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The merger is expected to create savings of $375m, a joint statement said. The companies settled on the smaller deal instead.

The pact envisages that for every 10 shares they own, Rite Aid shareholders will receive either one Albertsons share plus $1.83 in cash, or 1.079 Albertsons shares.

The move allows Albertsons to create a "food, health and wellness leader", officials with the Boise, Idaho-based chained said.

Albertsons, which is backed by private equity firm Cerberus Capital Management LP, previous year put plans for an initial public offering on hold after Amazon acquired Whole Foods, according to people familiar with the situation.

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.

View Rite Aid's stock price in real time here.

Serving customers when, where and how they want to shop: The combined company's expanding omnichannel platform will provide customers with convenience, choice and flexibility through multiple in-store formats, digital channels, and same-day food and prescription delivery options from stores and via Drive Up & Go. It had a 2015 bid shelved, and was said to be making another run at an IPO until Amazon acquired Whole Foods for $13.7 billion. RAD CEO John Standley will head the combined company, which is expected to bring in roughly $83 billion in annual revenue.

Other reports by GizPress

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