RAD Rite Aid Corp

By Austen Hufford 

Pharmacy chain Fred's Inc. said Tuesday it has adopted a so-called shareholder rights plan, less than a week after an activist investor took a nearly 25% stake in the company.

Thursday, The Wall Street Journal reported that Alden Global Capital had quietly amassed its stake in the company.

The poison pill, as shareholder-rights plans are often called, could limit Alden's ability to add to its stake, as it would kick in to potentially dilute the company's share count if an existing large shareholder expanded its holdings or a new shareholder built a 10% stake.

Alden didn't immediately respond to a request for comment.

Last week, Fred's shares rose sharply after Fred's said it would more than double its size by purchasing 865 stores Rite Aid Corp. needs to sell to close its merger with Walgreens Boots Alliance Inc.

Fred's said Tuesday the plan reduces the likelihood for anyone to "gain control of the company through open market accumulation without appropriately compensating its shareholders for such control or providing the board sufficient time to make informed judgments."

Fred's also said it has "an ongoing dialogue with a number of shareholders and always welcomes all constructive input," but said it wouldn't comment on specific discussions with shareholders.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

December 27, 2016 08:13 ET (13:13 GMT)

Rite Aid (NYSE:RAD)
Historical Stock Chart
From Mar 2024 to Apr 2024

Rite Aid (NYSE:RAD)
Historical Stock Chart
From Apr 2023 to Apr 2024