DEERFIELD, Ill. & CAMP HILL, Pa.–(BUSINESS WIRE)–Walgreens Boots Alliance, Inc. (Nasdaq: WBA) and Rite Aid Corporation
(NYSE: RAD) announced today they have entered into an agreement to sell
865 Rite Aid stores and certain assets related to store operations to
Fred’s, Inc. (Nasdaq: FRED) for $950 million in an all-cash transaction.
The transaction is subject to Federal Trade Commission (FTC) approval,
the approval and completion of the pending acquisition of Rite Aid by
Walgreens Boots Alliance, and other customary closing conditions.
The agreement is being entered into to respond to concerns identified by
the FTC in its review of the proposed acquisition of Rite Aid by
Walgreens Boots Alliance, which was announced in October 2015. Walgreens
Boots Alliance is actively engaged in discussions with the FTC regarding
the transaction and is working toward a close of the Rite Aid
acquisition in early calendar 2017.
The proposed divestiture transaction, if approved, would establish
Fred’s Pharmacy as one of the largest drugstore chains in the United
States with significant presence in areas such as the South and on the
East and West Coasts. Specific locations of the stores to be divested
will be announced upon FTC approval of the Walgreens Boots Alliance and
Rite Aid merger.
Under the terms of the purchase agreement, Fred’s Pharmacy would acquire
865 Rite Aid stores and certain assets related to store operations, and
expects to continue to employ all store associates and certain field and
regional associates related to the operations of the acquired stores
upon completion of the divestiture. Fred’s Pharmacy would continue to
operate the acquired stores under the Rite Aid banner during a
transition period. If the FTC requires divestiture of more than the 865
Rite Aid stores currently contemplated by the purchase agreement and
Walgreens Boots Alliance agrees to sell such stores, the purchase
agreement requires Fred’s to purchase such additional stores.
Walgreens Boots Alliance continues to expect that it will realize
synergies from the acquisition of Rite Aid in excess of $1 billion, to
be fully realized within three to four years of closing of the merger.
These synergies, as previously disclosed, are expected to be derived
primarily from procurement, cost savings and other operational matters.
“We are pleased to have found an experienced pharmacy operator for these
stores,” said Walgreens Boots Alliance Executive Vice Chairman and CEO
Stefano Pessina. “With this agreement, we are moving ahead with
important work necessary to obtain approval of our acquisition of Rite
Aid. We look forward to continuing to provide our customers and patients
with the highest level of care and attention.”
“We greatly appreciate the dedication of our Rite Aid associates who are
taking great care of our customers and patients during this period,”
said Rite Aid Chairman and CEO John Standley. “We look forward to
working closely with Fred’s to ensure a smooth, successful transition
for our customers, patients and associates in the divested stores.”
BofA Merrill Lynch acted as Walgreens Boots Alliance’s financial
adviser, with Sidley Austin LLP acting as its legal counsel on
transaction legal matters and Weil, Gotshal & Manges LLP acting as its
legal counsel on antitrust regulatory matters.
Citi acted as Rite Aid’s exclusive financial adviser, with Skadden,
Arps, Slate, Meagher & Flom LLP acting as Rite Aid Corporation’s legal
counsel on transaction legal matters and Jones Day acting as its legal
counsel on antitrust regulatory matters.
Notes to Editors:
About Walgreens Boots Alliance
Walgreens Boots Alliance (Nasdaq: WBA) is the first global pharmacy-led,
health and wellbeing enterprise.
The company was created through the combination of Walgreens and
Alliance Boots in December 2014, bringing together two leading companies
with iconic brands, complementary geographic footprints, shared values
and a heritage of trusted health care services through pharmaceutical
wholesaling and community pharmacy care, dating back more than 100 years.
Walgreens Boots Alliance is the largest retail pharmacy, health and
daily living destination across the USA and Europe. Walgreens Boots
Alliance and the companies in which it has equity method investments
together have a presence in more than 25* countries and employ more than
400,000* people. The company is a global leader in pharmacy-led, health
and wellbeing retail and, together with the companies in which it has
equity method investments, has over 13,200* stores in 11* countries as
well as one of the largest global pharmaceutical wholesale and
distribution networks, with over 390* distribution centers delivering to
more than 230,000** pharmacies, doctors, health centers and hospitals
each year in more than 20* countries. In addition, Walgreens Boots
Alliance is one of the world’s largest purchasers of prescription drugs
and many other health and wellbeing products.
The company’s portfolio of retail and business brands includes
Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as
increasingly global health and beauty product brands, such as No7,
Botanics, Liz Earle and Soap & Glory. More company information is
available at www.walgreensbootsalliance.com.
* As of 31 August 2016, using publicly available information for
** For 12 months ending 31 August 2016, using publicly available
information for AmerisourceBergen.
About Rite Aid
Rite Aid Corporation (NYSE: RAD) is one of the nation’s leading
drugstore chains with nearly 4,600 stores in 31 states and the District
of Columbia and fiscal 2016 annual revenues of $30.7 billion.
Information about Rite Aid, including corporate background and press
releases, is available through the company’s website at www.riteaid.com.
Cautionary Note Regarding Forward Looking Statements
Certain statements in this press release may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “should,” and “will” and variations of such words and similar
expressions are intended to identify such forward-looking statements.
All statements, other than historical facts, including statements
regarding the expected timing of the closing of the transactions; the
ability of the parties to complete the transactions considering the
various closing conditions; the expected benefits of the transactions
such as improved operations, enhanced revenues and cash flow, growth
potential, market profile and financial strength; the competitive
ability and position of the companies following completion of the
proposed transactions; and any assumptions underlying any of the
foregoing, are forward-looking statements. The inclusion of such
statements should not be regarded as a representation that such plans,
estimates or expectations will be achieved. These forward-looking
statements are based upon current plans, estimates and expectations, are
not guarantees of future performance and involve risks, assumptions and
uncertainties, including, but not limited to, risks related to the
possibility that the transactions may not close, including because one
or more closing conditions to the transactions, including certain
regulatory approvals, may not be satisfied or waived, on a timely basis
or otherwise, including that a governmental entity may prohibit, delay
or refuse to grant approval for the consummation of the transactions, or
may require conditions, limitations or restrictions in connection with
such approvals; the risk that there may be a material adverse change of
Rite Aid or the acquired stores, or the business of Rite Aid or the
acquired stores may suffer as a result of uncertainty surrounding the
transactions; risks related to the ability to realize the anticipated
benefits of the proposed transactions, including the possibility that
the expected synergies from the proposed transactions will not be
realized or will not be realized within the expected time period; the
risk that the businesses and acquired stores, as applicable, will not be
integrated successfully; risks associated with the financing of the
proposed transactions; disruption from the proposed transactions making
it more difficult to maintain business and operational relationships;
significant transaction costs; unknown liabilities; the risk of
litigation and/or regulatory actions related to the proposed
transactions; other business effects, including the effects of industry,
market, economic, political or regulatory conditions or changes in
federal or state laws or regulations; future exchange or interest rates
or credit ratings; changes in tax laws, regulations, rates and policies;
competitive developments; and risks and uncertainties discussed in the
reports that Walgreens Boots Alliance and Rite Aid have filed with the
U.S. Securities and Exchange Commission. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. Accordingly, you are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. Walgreens
Boots Alliance and Rite Aid expressly disclaim any current intention to
update publicly any forward-looking statement after the distribution of
this release, whether as a result of new information, future events,
changes in assumptions or otherwise. A further list and description of
risks and uncertainties can be found in Walgreens Boots Alliance’s
Annual Report on Form 10-K for the fiscal year ended August 31, 2016 and
its subsequent filings, and in Rite Aid’s Annual Report on Form 10-K for
the fiscal year ended February 27, 2016 and its subsequent filings.
There can be no assurance that the requisite regulatory approvals will
be obtained, or that the transactions will be completed within the
required time period. This release does not constitute an offer of any
securities for sale.
Walgreens Boots Alliance, Inc.
Michael Polzin, +1 847 315 2935
International / Laura Vergani, +44
(0)207 980 8585
Gerald Gradwell and
Ashish Kohli, +1 847 315 2922
Rite Aid Corporation
Ashley Flower, +1 717 975 5718
Matt Schroeder, +1 717 214 8867