CA: Rite Aid, Walgreens to sell stores to Fred’s Inc.
In a bid to bolster its chances to buy Rite Aid, Walgreens Boots Alliance and Rite Aid said Tuesday that they plan to sell hundreds of Rite Aid locations to Fred’s Inc. for $950 million. USA TODAY
Walgreens Boots Alliance Inc. and the Rite Aid Corp. agreed to sell the stores to ease federal officials’ concerns about a $9.5 billion bid by Walgreens announced in October 2015 to buy Rite Aid and merge the two industry giants. Fred’s purchase of the stores is subject to approval by the Federal Trade Commission and completion of Walgreens’ acquisition of Rite Aid.
Fred’s Pharmacy could be required to purchase additional stores if the FTC requires Rite Aid to shed more of its nearly 4,600 stores and Walgreens agrees to sell, according information released by the companies.
The agreement requires Fred’s to continue to employ all workers at acquired Rite Aid stores, as well as some field and regional employees, and to operate those stores under the Rite Aid name during a 24-month transition period.
The companies said the Rite Aid stores that Fred’s has agreed to buy are generally in the South and on the East and West coasts. Store locations won’t be announced until the FTC approves the Walgreens purchase of Rite Aid.
Fred’s and subsidiaries operate 647 discount stores, with 371 full-service pharmacies among them, and three specialty pharmacies in 15 southeastern states.
“This will be a transformative event for Fred’s Pharmacy that will accelerate our healthcare growth strategy through our acquisition of 865 new stores located in highly attractive markets,” Michael Bloom, chief executive officer of Fred’s, said in a statement.
Wall Street reacted positively to the news, with Fred’s stock price jumping about 75 percent, to about $19.50, by about 11 a.m.