Walgreens, Rite Aid to Sell Stores to Fred's for Merger Approval
December 20 2016 - 11:11AM
Dow Jones News
By Anne Steele
Walgreens Boots Alliance Inc. and Rite Aid Corp., seeking
regulatory approval to complete their $9.4 billion tie-up, on
Tuesday said they agreed to sell 865 of the latter's stores to
Fred's Inc. for $950 million in cash.
The asset sale is subject to Federal Trade Commission approval
as well as the approval and completion of Walgreens' pending
acquisition of Rite Aid.
Walgreens, actively engaged in discussions with the FTC, is
working toward a close of the Rite Aid acquisition in early 2017.
The agreement announced Tuesday is in response to concerns the FTC
raised in its review of the proposed acquisition, which was
announced in October 2015.
The proposed divestiture would establish Fred's as one of the
largest drugstore chains in the U.S., with significant presence in
the South and on both coasts, the companies said. Specific
locations will be released if the Rite Aid acquisition is
approved.
Fred's would continue to operate the acquired stores under the
Rite Aid banner during a transition period. In the agreement, if
the FTC requires further divestiture and Walgreens Boots Alliance
agrees, Fred's will purchase additional stores.
Fred's shares -- which had been halted before the announcement
and had lost 32% so far this year -- bounded up 61% to $18.50
Tuesday morning. Shares of Rite Aid and Walgreens rose 5.5% and
1.2%, respectively, with Rite Aid approaching the $9 offer
price.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
December 20, 2016 10:56 ET (15:56 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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