Albertsons Cos., the second-largest supermarket chain in North America, signed a merger agreement with drugstore chain Rite Aid Corp. The combined company is expected to earn revenues of $83 billion in 2018.
“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 CEO John Standley. “The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and enhance our pharmacy footprint.”
Standley will become CEO of the combined company and Albertsons chairman and CEO Bob Miller will serve as chairman. The company will operate main offices in Rite Aid’s Boise, Idaho, headquarters and Camp Hill, Pennsylvania, where privately owned Albertsons is based.
The new company will operate 4,900 locations, 4,350 pharmacy counters and 320 clinics across 38 states and Washington, D.C.
“We are confident that delivering improved customer experiences and value will drive growth and profitability while creating compelling long-term value for shareholders,” Standley said.
The name of the combined company will be determined by transaction close. Most Albertsons pharmacies will be rebranded as Rite Aid and the company will continue to operate Rite Aid standalone pharmacies.
“The hallmark of Albertsons Companies’ business has been to become the favorite local supermarket of our customers,” Miller said. “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.”
Under the terms of the agreement, Rite Aid shareholders will have the right to elect to receive either one share of Albertsons common stock plus $1.83 in cash or 1.079 shares of Albertsons stock in exchange for every 10 shares of Rite Aid common stock.
Depending upon the results of cash elections, shareholders of Rite Aid will own a 28 percent to 29.6 percent stake in the combined company. Current Albertsons shareholders will own a 70.4 percent to 72 percent stake.
The transaction has been approved unanimously by the boards of directors of both companies. The merger is expected to close early in the second half of 2018, subject to approval by Rite Aid’s shareholders and regulatory approvals.
The deal follows an announcement in September that Walgreens Boots Alliance would buy 1,932 Rite Aid stores for $4.38 billion.
Rite Aid operates seven stores in Westchester and six stores in Fairfield County, according to the company’s website.