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Albertsons Merges with Rite Aid, Combining Groceries and Convenience

Albertsons Merges with Rite Aid, Combining Groceries and Convenience


BOISE, ID & CAMP HILL, PA
Tuesday, February 20th, 2018

Creating a wide-swooping business strategy by addressing new audiences with a recently announced merger is privately-held Albertsons Companies and publicly-traded Rite Aid Corporations. After the merger is finalized, Albertsons’ pharmacies will operate under Rite Aid’s name, and Rite Aid’s stand-alone pharmacies will continue to run under the title.

John Standley, Chairman and Chief Executive Officer, Rite Aid“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 Chief Executive Officer John Standley. “The combined platform positions Rite Aid to capitalize on our pharmacy expertise and expand and exchange our pharmacy footprint. We are confident that delivering improved customer experiences and value will drive growth and profitability while creating compelling long-term value for shareholders.”

The newly-merged company will run about 4,900 locations, 4,350 pharmacy counters, and 320 clinics throughout 38 states and Washington D.C., serving over 40 million customers every week once the transaction has been fully integrated.

According to its press release, the goal for the newly redesigned company will be to provide customers with flexible and convenient access to food, health, and wellness offerings, while delivering value to customers, employees, and shareholders in the following ways:

  • Enhancing geographic footprint and creating local networks in attractive geographies
  • Leveraging strong pharmacy network and Rite Aid’s pharmacy benefit management company, EnvisionRxOption, to drive customer growth
  • Utilizing data analytics and integrated loyalty programs to drive growth and target new customers
  • Combining strong own brand portfolios with extensive manufacturing and distribution network to drive revenue growth and operating efficiencies
  • Serving customers when, where, and how they want to shop

For every 10 shares of Rite Aid common stock, Rite Aid shareholders can elect to receive either one share of Albertsons Companies common stock and approximately $1.83 in cash, or they can gain 1.079 shares of Albertsons Companies stock, according to the merger’s stipulations. Further, Rite Aid shareholders will own 28 to 29.6 percent stake in the company once the merge closes, depending on cash elections results, the company’s recent press release explains.

In regards to the company’s fully diluted basis, the companies’ shareholders will hold 70.4 to 72 percent. If Rite Aid shareholders choose shares and cash, Albertsons Companies will gain 392.9 million shares outstanding on a pro forma and fully diluted basis once the merger is completed. Albertsons is expected to trade on the New York Stock Exchange once the merge transaction is finalized, while Rite Aid has been publicly traded.

Bob Miller, Chairman and Current Chief Executive Officer, Albertsons Companies“The hallmark of Albertsons Companies’ business has been to become the favorite local supermarket of our customers,” said Albertsons Companies Chairman and current Chief Executive Officer Bob Miller. “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. I have long known the excellent management team at Rite Aid, and we share a singular focus on superior customer service and a clear vision and strategy to become the favorite local supermarket and pharmacy to shoppers in every neighborhood we serve.”

Current Rite Aid Chairman and Chief Executive Officer John Standley will step into the new role of Chief Executive Officer of the combined company once the merge is completed, and Albertsons’ Chairman and Chief Executive Officer Bob Miller will be the company’s Chairman. This move showcases the company’s leadership hailing from both companies, and taking it a step further, the new singular company will have headquarters in both Boise, Idaho, and Camp Hill, Pennsylvania. The name for the company has yet to be decided but will come to be known once the transaction closes.

Lenard Tessler, Vice Chairman and Senior Managing Director, Cerberus Capitol Management“As a long-term partner to Albertsons Companies’ world-class management team, this transaction highlights Cerberus’s confidence in this team and our convictions to the underlying customer focus driving this combination,” said Lenard Tessler, Vice Chairman and Senior Managing Director at Cerberus Capitol Management, which is leading of a group of investors backing Albertsons’ merge. “As significant shareholders, we are very optimistic about the future of the combined company.”

Looking for more information on this scoop? Check out the press release here.

Wanting more industry-related details? Stay with us at Deli Market News!

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