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Albertsons to buy the rest of Rite Aid that isn't going to Walgreens

Albertson and Rite Aid are together valued at around US$24bn, including debt

Rite Aid
Rite Aid is selling nearly 2,000 stores to Walgreens

US grocery chain operator Albertsons Companies Inc (NYSE:ABS) plans to buy the rest of Rite Aid Corp (NYSE:RAD) that is not being sold to Walgreens Boots Alliance Inc (NASDAQ:WBA).

Albertsons, which owns Safeway and other supermarket chains, and drugstore chain Rite Aid are together valued at around US$24bn, including debt, the Wall Street Journal reported.

READ: Walgreens Boots Alliance gets regulatory green light for amended US$4.4bn Rite Aid deal

Under the proposed deal, Albertsons shareholders would own roughly 71% of the combined company while Rite Aid investors will own the rest.

If approved, the acquisition would create a company with revenue of US$83bn.

It would also pave the way for Albertsons to go public after more than 10 years of ownership by private equity firm Cerberus Capital Management LP.

The deal comes after federal regulators blocked the full sale of Rite Aid to Walgreens. Rite Aid now plans to sell 1,932 stores to Walgreens.

Rite Aid’s revenues have been hit by a slowdown in branded drug price rises and a drop in reimbursement rates for generics.

Albertsons and Rite Aid said a merger would be the best way to compete in a sector that is being increasingly threatened by Amazon.com Inc (NASDAQ:AMZN) and Walmart Inc (NYSE:WMT).

Amazon has become a new rival in food retail following the purchase of Whole Foods Market Inc while Walmart has improved its e-commerce offerings and product ranges.  

READ: Amazon.com delivers price cut promise as it completes Whole Foods takeover

“We know that scale matters,” Albertsons chief executive, Bob Miller, told the WSJ. “We continue to grow to compete with all competitors, not just Amazon.”

Quick facts: Rite Aid

Price: 13.44 USD

NYSE:RAD
Market: NYSE
Market Cap: $734.4 m
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