Albertsons Takes on Rite Aid, Combines Groceries and Convenience
BOISE, ID AND CAMP HILL, PA - In an effort to widen its business reach and broaden its audience, privately held Albertsons Companies is merging with publicly traded Rite Aid Corporations. With this merger, most of Albertsons’ pharmacies will operate under the name Rite Aid, and Rite Aid’s stand-alone locations will continue running under their current title.
“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,” said Rite Aid Chairman and Chief Executive Officer John Standley. “The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and exchange 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.”
Once the company has been fully integrated, it will run about 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington DC. The locations will serve over 40 million customers every week.
The goal of this merger is to provide customers of the company with flexible and convenient access to food, health, and wellness offerings, while delivering value to customers, employees, and shareholders in the following ways, according to its press release:
- Enhancing geographic footprint and creating local networks in attractive geographies
- Leveraging strong pharmacy network and Rite Aid’s pharmacy benefit management company, EnvisionRxOption, to drive customer growth
- Utilizing data analytics and integrated loyalty programs to drive growth and target new customers
- Combining strong own brand portfolios with extensive manufacturing and distribution network to drive revenue growth and operating efficiencies
- Serving customers when, where, and how they want to shop
The merger agreement stipulates that for every 10 shares of Rite Aid common stock, Rite Aid shareholders reserve the right to elect to receive either one share of Albertsons Companies common stock and about $1.83 in cash, or they can receive 1.079 shares of Albertsons Companies stock. Shareholders of Rite Aid will own 28 to 29.6 percent stake in the combined company upon the merging’s closure, depending on the results of cash elections, the company explained in a recent press release.
Shareholders for the companies will hold 70.4 percent to 72 percent in the merging company’s fully diluted basis. After the merger is finalized, with the assumption that Rite Aid shareholders elect to receive shares and cash, Albertsons Companies will garner 392.9 million shares outstanding on a pro forma and fully diluted basis. Rite Aid has previously been publicly traded, but Albertsons Companies will be expected to trade on the New York Stock Exchange after the transaction closes.
“The hallmark of Albertsons Companies’ business has been to become the favorite local supermarket of our customers,” said Albertsons Companies Chairman and current Chief Executive Officer Bob Miller. “We have always put our customers first, and our combination with Rite Aid will enable us to even better serve the valuable pharmacy customer by providing a fully integrated one-stop-shop for our customers’ food, health, and wellness needs. I have long known the excellent management team at Rite Aid, and we share a singular focus on superior customer service and a clear vision and strategy to become the favorite local supermarket and pharmacy to shoppers in every neighborhood we serve.”
After the merger is finalized, current Rite Aid Chairman and Chief Executive Officer John Standley will become Chief Executive Officer of the combined company. Chairman and Chief Executive Officer Bob Miller of Albertsons Companies will serve as Chairman once the transaction is completed. This is one display of how the fully merged companies are expected to run, with leadership coming from both companies and headquarters based in both Boise, Idaho, and Camp Hill, Pennsylvania. The name, though, has yet to be revealed and will come to light once the transaction closes.
“As a long-term partner to Albertsons Companies’ world-class management team, this transaction highlights Cerberus’s confidence in this team and our convictions to the underlying customer focus driving this combination,” said Lenard Tessler, Vice Chairman and Senior Managing Director at Cerberus Capitol Management, which is leading of a group of investors backing Albertsons’ merge. “As significant shareholders, we are very optimistic about the future of the combined company.”
If you want more details on the merger between the companies, check out the press release here.
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