Rite Aid Corp. said late Monday that it has transferred 97 stores and related assets to WBA. This completes the pilot closing and first subsequent closings under WBA’s $4.375 billion deal to buy 1,932 stores, three distribution centers and related inventory from Rite Aid.
Store purchases began in October. Ownership transfer of the remaining stores will occur in phases over the coming months, and the prospective timetable is to wrap up the the store transfers in spring 2018, according to the companies. Most of the closing conditions have been satisfied, and transfers of Rite Aid stores and related assets going forward are subject to minimal customary closing conditions, Rite Aid reported.
“Successfully completing the pilot closing and first subsequent closings marks an important step in realizing the full benefits of this transaction,” Rite Aid chairman and chief executive officer John Standley said in a statement. “I am proud of the entire Rite Aid team for their commitment and dedication to helping us reach this milestone. I also want to thank our team for their continued support as we complete the transfer process over the next several months and implement our plans to deliver improved results.”
Rite Aid said it plans to use “a substantial majority” of the transaction’s proceeds to pay down debt. The company added that it anticipates a minimal cash tax payment on the transaction, since the gain it will record on the asset sale is expected to be mostly offset by its net operating loss carry-forwards.
The asset sale announced Sept. 18 amended an agreement announced June 29, reducing the transaction sale price to $4.375 billion from $5.175 billion and the number of stores to 1,932 from 2,186.
In addition, the June agreement marked the termination of WBA’s $14 billion deal to acquire Rite Aid and began winding down a nearly two-year process that started in late October 2015 with the announcement of the Walgreens-Rite Aid merger deal and subsequent antitrust review by the Federal Trade Commission.
Plans call for the acquired Rite Aid stores to be converted to the Walgreens banner in phases over time, according to WBA.