Published: Thu, February 22, 2018
Tech | By Tabitha Holland

Owner of Safeway to buy Rite Aid drugstore chain

Owner of Safeway to buy Rite Aid drugstore chain

Boise-based grocery chain Albertsons Cos. has agreed to acquire Rite Aid Corp.

Within three years the combined company is expected to deliver annual run-rate cost savings of $375 million, with more than 60 percent within the first two years, the companies said.

According to Rite Aid spokesperson Ashley Flower, two Genesee Street locations - 47 E. Genesee St. and 314 Genesee St. - have been purchased by Walgreens Boots Alliance, which reached a deal to buy almost 2,000 Rite Aid locations last September. With 2,500 stores concentrated in the Northeast and the West Coast, Rite Aid it is hardly a national chain anymore, and tiny next to CVS and Walgreens, with roughly 10,000 locations apiece. Following the close of the transaction and the share exchange, Albertsons Companies' shares are expected to trade on the New York Stock Exchange.

"The hallmark of Albertsons Companies' business has been to become the favorite local supermarket of our customers", Miller, current Albertsons chairman and CEO who led a turnaround at Rite Aid in the early 2000s, said. Amazon made a push into the food business by buying the upscale grocery chain Whole Foods for $13.4 billion previous year.

"At this time, we don't have a list of Rite Aid stores in Maryland or the number of locations that are planned to transfer ownership to Walgreens", said Jim Cohn, a Walgreen Co. spokesman, on Tuesday.

Signs posted outside the Pepperell store say the pharmacy is now a Walgreens. That left Rite Aid with around 2,600 stores. The majority of the grocery chain's pharmacies will be rebranded as Rite Aid, and the acquired stand-alone stores will remain under its familiar banner.

Alby's purchase puts the companies' joint valuation at $24B, with 4.9k stores and 4.3k pharmacies across the United States - plus a new, yet-to-be-announced name for the partnership. The deal is expected to close later this summer, the companies said Tuesday, when Kimco will also have a better idea of the market value of its stake in Albertsons.

Retailers have been under growing pressure from online competitors like Inc., and the corner drugstore has been no exception. That deal could turn numerous chain's 9,800 stores into one-stop-shop locations for an array of health care needs like blood work and eye or hearing care in addition to their traditional role of filling prescriptions. The combination of Albertsons Companies' billion dollar own brands, including O Organics and Lucerne®, and its manufacturing and operating capabilities, with Rite Aid's own brands in health and wellness, including B4Y™ and Daylogic™, and its pharmacy expertise will allow the combined company to drive growth opportunities and efficiencies across its purchasing, marketing, manufacturing, and merchandising functions. Like its drugstore chain competition, Rite Aid operates walk-in clinics that can deal with cases of the flu, sinus infections and other relatively minor complaints. While the prescription drug businesses at pharmacies has been relatively stable, front-of-the-store sales have been in decline.

Rite Aid had already been seeking greater heft by combining with Walgreens.

Reportedly, the company is looking forward to a cash and stock deal with Rite Aid. The combined company would have headquarters in Camp Hill and in Boise, Idaho, where Albertsons is based.

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