Rite Aid has a market value of $2.3 billion.
But the proposed deal with Albertsons would suddenly make Rite Aid a lot larger.
The new, combined company will be renamed and operate more than 4,000 pharmacies (in store and standalone) and 320 clinics across 38 states and Washington, D.C. "Taking care of customers and patients is a top priority". 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. The number of meaningful takeover targets in the industry has narrowed for Albertsons, but in Rite Aid the grocer gains a strong brand in a sector that's becoming increasingly important for supermarkets.
Boise-based Albertsons Cos. operate stores across 35 states and Washington, D.C., under 20 banners 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 NY. "We are confident that delivering improved customer experiences and value will drive growth and profitability while creating compelling long-term value for shareholders". "The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and exchange our pharmacy footprint".
The merger would bring privately-backed Albertsons onto the New York Stock Exchange, finally taking the company public after years of speculation.
When the merger is completed, shareholders of Rite Aid will own a 28 percent to 29.6 percent stake in the combined company, and current Albertsons shareholders will own a 70.4 percent to 72 percent stake in the combined company.
Rite Aid Chairman and CEO John Standley will lead the combined company as CEO, while Albertsons leader Bob Miller will serve as chairman.
Albertsons said it will continue to run Rite Aid stand-alone stores, and most of the grocery operator's pharmacies will be rebranded as Rite Aid.
The name of the combined company will be determined by the time the transaction is finalized, according to a news release. Schwab Charles Investment Management Inc. grew its stake in shares of Rite Aid by 34.2% during the third quarter.
The new entity's board of directors will consist of four individuals to be named by Albertsons Cos., four named by Rite Aid and one jointly selected director.
Credit Suisse and Goldman Sachs & Co. The price of the Albertsons' transaction was not disclosed. Citi served as exclusive financial advisor to Rite Aid, while Skadden, Arps, Slate, Meagher and Flom LLP acted as legal advisor.
Albertsons is owned by the private equity group Cerberus Capital, which purchased the grocery store chain in 2013 for $3.3 billion. Albertsons even has launched a digital platform created to give CPG brands access to shopper data to help them deliver targeted ad campaigns, showing that it is very serious about engaging consumers at all points of the shopper journey.