There is a new chapter in the ongoing saga of Rite Aid Corp. Albertsons Cos. is buying the remaining 2,500-plus Rite Aid pharmacies that were not part of those sold to Walgreens Boots Alliance after the proposed deal announced in 2015 was not approved by the Federal Trade Commission. Rite Aid is currently in the process of transferring 1,932 stores to Walgreens Boots Alliance.
Enter Albertsons, which has agreed to merge Rite Aid as part of an estimated $24 billion deal (Albertsons and Rite Aid did not disclose a total) that will include taking the grocery powerhouse public. Albertsons Cos. and Rite Aid said that the combined company will generate pro forma revenue of about $83 billion and operate about 4,900 stores, 4,350 pharmacy locations and 320 in-store health clinics across 38 states and Washington, D.C., serving more than million customers per week.
The Rite Aid logo will be added to most Albertsons’ pharmacies, while the company said it will continue to operate Rite Aid stand-alone pharmacies. Albertsons operates under 20 logos including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs. Rite Aid chairman and chief executive officer John Standley will become chief executive of the merged company. Current Albertsons Cos. chairman and ceo Bob Miller will serve as chairman. Miller is no stranger to Rite Aid having served as ceo of Rite Aid from 1999 to 2003. Upon completion of the merger, there will be dual headquarters in Boise, Idaho and Camp Hill, Pa.
“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,” stated Standley. “The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and enhance our pharmacy footprint.” The transaction 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.
The merger is another example of the big getting bigger to better contend with online growth and mega-chains such as Wal-Mart and Walgreens Boots Alliance. Albertsons Cos. and Rite Aid noted that the combined company will be ranked first or second in 66 percent of the top U.S. metropolitan areas and first or second in 70 percent of U.S. pharmacy locations. Other advantages will be leveraging loyalty programs and data, combining private label brands and expanding omnichannel opportunities.
Albertsons is backed by an investment consortium led by Cerberus Capital Management, which also includes Kimco Realty Corporation, Klaff Realty, Lubert-Adler Partners and Schottenstein Stores Corporation. After completion of the asset sale to WBA, Rite Aid will have 2,569 drug stores served by six distribution centers. Overall, Albertsons Cos. now has more than 2,300 supermarkets and 1,700-plus in-store pharmacies in 35 states and the District of Columbia. With Rite Aid, Albertsons nabs a chain that has upgraded its beauty department over the past five years with niche brands and boutiques such as men’s grooming.