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Rite Aid-Albertsons Merger Crosses First Antitrust Hurdle
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Rite Aid Corporation , following the completion of transferring stores to Walgreens (WBA - Free Report) , revealed that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired on Mar 28, 2018, satisfying one of the conditions for its merger with Albertsons Companies, Inc.
Rite Aid had agreed to merge with the country’s largest grocer, Albertsons Companies, in February 2018. The merger will not only help revive the distressed Rite Aid’s business but also aid in dispelling the fear of competition from Amazon (AMZN - Free Report) . Per the deal, Rite Aid shareholders have the choice to opt for Albertsons’ shares and cash or only the company’s shares.
For every 10 Rite Aid shares, shareholders can get one Albertsons share and $1.83 in cash or 1.079 Albertsons shares. This will leave Rite Aid shareholders with about 28-29.6% stake in the combined company, subject to the outcome of the cash elections. Meanwhile, Albertsons’ shareholders will own a 70.4-72% stake in the combined company.
The combined company is expected to generate annual revenues of about $83 billion. Further, the new entity anticipates delivering annual run-rate cost savings of $375 million in the next three years. Of these, the companies expect to realize nearly 60% of the cost synergies in the first two years after closing the transaction. Additionally, the companies anticipate identifying about $3.6 billion of potential revenue opportunities.
The new company will operate about 4,900 locations including 4,350 pharmacy counters and 320 clinics, across 38 states and Washington D.C. The company will serve more than 40 million customers per week. The companies plan to re-banner most of the Albertsons pharmacies to Rite Aid Stores following the completion of the transaction, while Rite Aid will continue to operate its stand-along pharmacies.
The merger is also approved by the board of directors of both companies. Further, it is expected to be closed by the second half of calendar year 2018, conditioned upon receipt of approval from Rite Aid shareholders, and other regulatory and customary closing conditions.
The drugstore industry in general has been witnessing increased consolidation lately. After the failed merger between Walgreens and Rite Aid, the industry has seen CVS Health Corp. (CVS - Free Report) enter a deal to acquire Aetna, Inc. in January 2018. Additionally, Walgreens has bid to buy AmerisourceBergen Corp. , a leading drug wholesale company.
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Rite Aid-Albertsons Merger Crosses First Antitrust Hurdle
Rite Aid Corporation , following the completion of transferring stores to Walgreens (WBA - Free Report) , revealed that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired on Mar 28, 2018, satisfying one of the conditions for its merger with Albertsons Companies, Inc.
Though Rite Aid shares did not react much to this announcement, this Zacks Rank #3 (Hold) stock declined 20.4% in the last three months. This marks an underperformance from the industry’s fall of 12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rite Aid had agreed to merge with the country’s largest grocer, Albertsons Companies, in February 2018. The merger will not only help revive the distressed Rite Aid’s business but also aid in dispelling the fear of competition from Amazon (AMZN - Free Report) . Per the deal, Rite Aid shareholders have the choice to opt for Albertsons’ shares and cash or only the company’s shares.
For every 10 Rite Aid shares, shareholders can get one Albertsons share and $1.83 in cash or 1.079 Albertsons shares. This will leave Rite Aid shareholders with about 28-29.6% stake in the combined company, subject to the outcome of the cash elections. Meanwhile, Albertsons’ shareholders will own a 70.4-72% stake in the combined company.
The combined company is expected to generate annual revenues of about $83 billion. Further, the new entity anticipates delivering annual run-rate cost savings of $375 million in the next three years. Of these, the companies expect to realize nearly 60% of the cost synergies in the first two years after closing the transaction. Additionally, the companies anticipate identifying about $3.6 billion of potential revenue opportunities.
The new company will operate about 4,900 locations including 4,350 pharmacy counters and 320 clinics, across 38 states and Washington D.C. The company will serve more than 40 million customers per week. The companies plan to re-banner most of the Albertsons pharmacies to Rite Aid Stores following the completion of the transaction, while Rite Aid will continue to operate its stand-along pharmacies.
The merger is also approved by the board of directors of both companies. Further, it is expected to be closed by the second half of calendar year 2018, conditioned upon receipt of approval from Rite Aid shareholders, and other regulatory and customary closing conditions.
The drugstore industry in general has been witnessing increased consolidation lately. After the failed merger between Walgreens and Rite Aid, the industry has seen CVS Health Corp. (CVS - Free Report) enter a deal to acquire Aetna, Inc. in January 2018. Additionally, Walgreens has bid to buy AmerisourceBergen Corp. , a leading drug wholesale company.
Can Hackers Put Money INTO Your Portfolio?
Earlier this year, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>