The combined company is expected to generate revenues of about $83 billion in its first year.
The S&P index for drug retail has fallen 11% in the past year, and the big 3 pharmacies are all scrambling to keep their footholds: In addition to Walgreens' purchase of 2k Rite Aid stores, CVS has a $69B purchase of healthcare company Aetna now under regulatory review. Because the combined company will be publicly traded, the Rite Aid deal will give Cerberus a path to exit its investment without having to do an IPO in a volatile market.
In Rite Aid, Albertsons Companies is buying a chain that has already remodeled more than half of its stores into a format that includes expanded pharmacy services and more health products. Albertsons has agreed to merge with Rite Aid as part of a $24 billion deal that will take the privately-held grocer public. The company has been hit as other retail landlords, namely mall owners, are under fire after news of store closures and tenants going bankrupt. Aetna and CVS say they'll be able to offer low-priced care through the chain's many locations, via apps and the phone, according to reports. On a recent conference call with analysts and investors, Kimco's management said the company was also focused on disposing of assets in the coming year, moving out of less-profitable markets. The grocery industry as a whole is worth $800 billion and the drug industry is worth about $450 billion in the US, according to Bloomberg.
Amazon's competitors also are bulking up health care services, which can not be purchased online. Without that source of revenue, health care premiums could become more expensive, according to experts. Even Amazon has made a move to shake up the health care industry, partnering with Berkshire Hathaway and JPMorgan Chase to create an independent health care company for employees.
The combination will have 4,892 stores and more than 4,300 pharmacies with a stronger presence on both coasts of the USA market.
Walgreens wanted to buy up all of Rite Aid in 2015, but federal regulators nixed that agreement on antitrust grounds.
Grocery store chain Albertsons, drugstore Rite Aid unveil tie-up
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According to a company press release, the combined company is expected to serve more than 40 million US customers per week at approximately 4,900 locations, 4,350 pharmacy counters, and 320 health clinics across 38 states and Washington D.C. It is expected to generate revenues of $83 billion. Depending upon the results of cash elections, when the merger closes, shareholders of Rite Aid will own a 28 percent to 29.6 percent stake in the combined companies, and current Albertsons Cos. shareholders will own a 70.4 percent to 72.0 percent stake in the combined companies on a fully diluted basis.
Albertsons also owns Safeway stores, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs, and the meal kit company Plated.
Amazon's competitors also are bulking up health care services, which can not be purchased online.Late a year ago, Rite Aid rival CVS Health Corp. said it would buy the health insurer Aetna for $69 billion.
Rite Aid Chairman and CEO John Standley will lead the combined company as CEO, while Albertsons leader Bob Miller will serve as chairman.
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