The 185 pharmacy locations are in 10 Southeastern states
Under the terms of the agreement, the aggregate consideration to be paid by Walgreens to Fred’s is $165 million, subject to adjustment, plus an amount equal to the value of related pharmacy inventory.
Fred’s exit from pharmacy comes after the retailer was unable to escalate its shift to health care when a deal to buy hundreds of Rite Aid stores was not approved by the Federal Trade Commission last year.
“This agreement increases patient access to Walgreens pharmacies in the Southeastern U.S., and allows us to introduce more people to Walgreens trusted pharmacy services in these communities. We look forward to welcoming Fred’s patients and team members who are hired into available Walgreens positions,” said Richard Ashworth, Walgreens president of operations.
The transaction is part of a previously announced plan by Fred’s to unlock shareholder value by monetizing non-core assets through strategic transactions. Fred’s will continue to operate its retail stores at most of these locations after the pharmacies close. Once the transaction is complete, Fred’s will continue to operate approximately 162 pharmacies across nearly 600 stores. Fred’s pharmacy staff at the closing locations will have an opportunity to apply for any available positions at Walgreens.
“With this agreement, we have taken a major step towards achieving one of our main goals of eliminating our debt balance,” said Joe Anto, interim chief executive officer and chief financial officer of Fred’s. “We look forward to partnering with Walgreens to transition our pharmacy patients in these locations as smoothly as possible.”
The transaction is subject to the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction or waiver of certain other customary closing conditions. The companies expect the file transfers to begin in the fourth quarter of calendar 2018 and be completed in the first quarter of calendar 2019.
Patients whose prescriptions are being transferred will be notified by letter, and the parties will work together to help ensure a smooth transition. Once patient prescriptions are transferred from Fred’s to Walgreens, patients will have access to Walgreens pharmacy services across a network of approximately 9,800 pharmacies nationwide.