Rite Aid and Albertsons Terminate Merger

Rite Aid Corporation has announced an agreement with Albertsons Companies Inc. to terminate their planned merger.
 
While the deal had been conceived as a method of competing with Amazon, some large Rite Aid shareholders objected, saying that they would vote against the merger. They argued that Rite Aid’s potential for revenue had been underestimated and that its prescription service program would yield more than expected.
 
“While we believed in the merits of the combination with Albertsons,” says John Standley, Rite Aid chairman and CEO.
 
“We have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company. We remain focused on leveraging our network of conveniently located retail pharmacies, our EnvisionRxOptions PBM and our trusted brand of health and wellness offerings.”
 
Standley adds, “We will continue building momentum for key areas of our business like our innovative Wellness store format, our highly successful customer loyalty program, and our expanded pharmacy service offerings. We will also enhance our omni-channel and brand offerings to strengthen our competitive position and create long-term value for stockholders.”
 
In an August 8th press release, Albertsons stated that it “disagreed with the conclusion of certain Rite Aid stockholders and third-party advisory firms that Albertsons Companies was not offering sufficient merger consideration to Rite Aid stockholders.”
 
After reviewing new terms from Rite Aid, Albertsons declined.
 
However, the release also said that Albertsons “remains excited about the improving momentum, financial strength, and industry leadership of” the company.
 
As evidence, it highlighted consecutive quarters of top-line and bottom-line growth and the near-completion of integrating its stores with in-house systems as part of a merger with Safeway.
 
“We also have continued to differentiate ourselves through our best-in-class ‘Own Brands’ portfolio,” the release stated, “which is expected to add over 1,100 new items this year as well as through our expanding eCommerce offerings, which grew 108 percent year-over-year in the first quarter.”
 
Under the terms of the merger agreement, neither Rite Aid nor Albertsons will be responsible for any payments to the other party as a result of the termination of the merger agreement.
 
Rite Aid also announced its board of directors is evaluating governance changes at the company. As it considers these changes, Rite Aid will continue to engage with stockholders to ensure alignment between the company and its investors.
 
 
 

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