Rite Aid Corporation (NYSE:RAD) And Walgreens Boots Alliance Inc (NASDAQ:WBA) have finalized a deal to offer 865 Rite Aid stores and specific assets linked to store businesses to Fred’s, Inc. (NASDAQ:FRED) in a deal valued at $950 million. It is disclosed to be an all-cash deal. The transaction is reliant to Federal Trade Commission approval, the nod and closing of the pending acquisition deal of Rite Aid by Walgreens Boots, and other customary closing terms.
The deal is being finalized in respond to issues identified by the FTC in its assessment of the proposed deal of Rite Aid by Walgreens Boots, which was reported last year. Walgreens Boots Alliance is engaged in talks with the FTC pertaining to the deal and is working toward a completion of the Rite Aid deal in early 2017.
The projected divestiture deal, if approved, would institute Fred’s Pharmacy a leading drugstore chains in the U.S. with considerable presence in regions such as the South and on the West and East Coasts. Specific sites of the stores to be separated will be reported upon FTC nod of the Rite Aid and Walgreens Boots Alliance merger.
Under the conditions of the purchase deal, Fred’s Pharmacy would buy 865 Rite Aid stores and specific assets associated to store businesses, and anticipates to continue to engage all store associates and specific regional and field associates linked to the businesses of the bought stores upon closure of the divestiture.
Fred’s Pharmacy would operate the bought stores under the Rite Aid brand during transition period. In case the FTC wants divestiture of over 865 Rite Aid stores presently contemplated by the purchase deal and Walgreens Boots approves to sell such stores, the deal necessitates to buy such additional stores.
Walgreens Boots expects to realize synergies from the Rite Aid acquisition in surplus of $1 billion, to be entirely realized within 3-4 years of merger completion.