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Rite Aid ready to put merger to a vote

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CAMP HILL, Pa. — Rite Aid Corp. shareholders will vote on the company’s merger with Albertsons Cos. at a special meeting on August 9.

If approved, the $24 billion transaction would take privately held Albertsons public and give its shareholders a majority stake in the combined company. The merged entity would be a top-five food and drug retailer, with some 4,900 stores, 4,310 pharmacies and 320 in-store clinics.

In a letter to shareholders, Rite Aid said its board and management “are confident that the merger with Albertsons is the right combination, with the right partner, at the right time.”

The merger “significantly enhances the company’s scale and diversifies its business,” the letter said. “We also expect it will improve the company’s growth prospects, financial strength and ability to deliver compelling long-term value for shareholders and customers.

“In addition to ownership in a stronger, better-positioned company, Rite Aid shareholders will share in the incremental benefits created by the $375 million in expected run-rate cost synergies and $3.6 billion of expected incremental revenue opportunities.”

The transaction has been unanimously approved by the boards of both companies. Pending approval of Rite Aid shareholders, regulatory clearance and other customary closing conditions, the deal is expected to close in the second half of this year.

The merger has drawn opposition from some Rite Aid shareholders who say it undervalues the drug chain’s assets — notably the EnvisionRx pharmacy benefits manager — and would combine it with a grocer when food retailing is threatened by Amazon and e-commerce initiatives from other players.

Chris Komatinsky, a Los Angeles investor who with his family owns about 1.5 million Rite Aid shares, has been calling for a vote against the deal. “We’ve received a flood of additional individual shareholders with like views ,” he wrote in an open letter. “We’re still working to engage with large institutional shareholders for their support against the merger as well. We’re real, we’re rational, we’ve assembled a large block of shares [more than 34 million], and we’re ready to have a discussion on maximizing Rite Aid shareholder value.”


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