MBJ: Fred’s to become third-largest drug store chain in country
Memphis-based Fred’s Inc. just agreed to an acquisition that would make it the third-largest drug store chain in the U.S.
Fred’s Pharmacy (NASDAQ: FRED) will acquire 865 Rite Aid stores as part of a $950 million cash deal with Walgreens Boots Alliance Inc. (NASDAQ: WBA) and Rite Aid Corp. (NYSE: RAD). The stores will be located across parts of the eastern and western U.S.
“This will be a transformative event for Fred’s Pharmacy that will accelerate our health care growth strategy through our acquisition of 865 new stores located in highly attractive markets,” said Michael K. Bloom, Fred’s Pharmacy CEO, in a release. “We believe that this transaction will also create tremendous opportunities for both our new and existing front of store and pharmacy team members. We look forward to realizing the considerable benefits this transaction will bring to our customers, patients, payors, supplier partners, team members and shareholders.”
Speculation that Fred’s would acquire Walgreens or Rite Aids stores was strengthened during Fred’s third quarter earnings call after a pending transaction was mentioned.
Walgreens Boots Alliance announced in 2015 it would acquire Rite Aid Corp. in a $9.4 billion deal. Before that deal can close, the companies have to sell or divest up to 1,000 stores to comply with federal regulations. Enter Fred’s.
According to the release, Fred’s is expected to close on the stores several months after Walgreens Boots Alliance and Rite Aid Corp. close on their deal. The Walgreens/Rite Aid acquisition is still subject to final Federal Trade Commission and other regulatory measures.
Upon completion of the acquisition, Fred’s will continue to operate the stores as Rite Aids through a 24-month transition.