Albertsons Scoops Up the Rest of Rite Aid
Privately held Albertsons Cos. is the latest retailer to seek a chunk of Rite Aid, revealing plans to purchase the portion of the publicly traded company that isn't being sold to Walgreens.
By merging their operations, the grocer and drugstore chain aim to become better positioned to offer shoppers more flexible and convenient access to a full range of food, health and wellness offerings in an increasingly crowded space. The chief executives of both companies told The Wall Street Journal that the merger is the best way for them to compete in a business that is becoming more and more threatened by Amazon, along with an emboldened Walmart.
A new name for the integrated company is still in the works. It will be valued at approximately $24 billion and encompass roughly 4,900 locations, 4,350 pharmacy counters and 320 clinics across 38 states and Washington, D.C. Most Albertsons pharmacies will be rebranded as Rite Aid, and the combined company will continue to operate stand-alone Rite Aid pharmacies.
The new leadership team will be comprised of executives from both companies, and will be dual headquartered in Boise, ID, and Camp Hill, PA. Current Rite Aid chief executive officer John Standley will become ceo, while current Albertsons ceo Bob Miller will serve as chairman.
Under the terms of the cash-and-stock deal, Rite Aid shareholders will get nearly a third stake in the combined company. Following regulatory approvals, the transaction is likely to close in the early second half of this year, at which point Albertsons Cos. shares are expected to trade on the New York Stock Exchange.
Walgreens is purchasing some 2,000 Rite Aid stores after failing to gain the regulatory approval required to acquire the whole company.
According to the companies, Rite Aid’s strong pharmacy network, along with its benefits management company EnvisionRxOptions, will help drive incremental growth by deepening existing relationships and expanding reach across higher-value pharmacy customers. The companies plan to achieve this through a full suite of health and wellness capabilities, including specialty pharmacy offerings and in-store RediClinics in larger Albertsons stores and stand-alone Rite Aid stores.
Enhanced data and analytics will help unlock profitable growth through new customer acquisition, new merchandising programs, and demand forecasting. It will also create cross-branded opportunities for loyalty programs, improving connections across a combined current base of 25 million active loyalty program participants.
Albertsons' billion-dollar own brands (including O Organics and Lucerne) and its manufacturing and operating capabilities, along with Rite Aid’s health and wellness own brands (including B4Y and Daylogic) and its pharmacy expertise will help drive growth opportunities and efficiencies across purchasing, marketing, manufacturing and merchandising functions.