Walgreens Boots Alliance, Rite Aid to Sell 865 Rite Aid Stores to Fred’s Pharmacy for $950M

DEERFIELD, ILL. AND CAMP HILL, PA. — Walgreens Boots Alliance (NASDAQ: WBA) and Rite Aid Corp. (NYSE: RAD) have agreed to sell 865 Rite Aid stores and some assets related to store operations to Fred’s (NASDAQ: FRED) for $950 million in an all-cash transaction.

The agreement came about due to concerns by the Federal Trade Commission (FTC) in its review of Walgreens Boots Alliance’s proposed acquisition of Rite Aid, which was announced in October 2015. That transaction is scheduled to close in early 2017.

The 865-store sale would make Fred’s one of the largest drugstore chains in the United States, with a significant presence in the South and on the East and West coasts.

If the sale is approved, Fred’s will continue to employ all store associates and certain field and regional associates related to the operations. The stores will also continue to operate under the Rite Aid banner. Fred’s has also agreed to purchase additional Rite Aid stores if the FTC mandates additional divestments for the proposed merger.

BofA Merrill Lynch acted as Walgreens Boots Alliance’s financial adviser. Sidley Austin LLP acted as legal counsel on transaction legal matters and Weil, Gotshal & Manges LLP acted as its legal counsel on antitrust regulatory matters.

Citi acted as Rite Aid’s exclusive financial adviser. Skadden, Arps, Slate, Meagher & Flom LLP acted as Rite Aid Corp.’s legal counsel on transaction legal matters and Jones Day acted as its legal counsel on antitrust regulatory matters.

Memphis-based Fred’s operates more than 650 discount general merchandise stores, which feature brand-name products, proprietary Fred’s label products and lower-priced, off-brand products.

Deerfield, Ill.-based Walgreens Boots Alliance claims to be “the largest retail pharmacy, health and daily living destination across the U.S. and Europe.” The company was created through the combination of Walgreens and Alliance Boots in December 2014. The company’s portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as health and beauty product brands like No7, Botanics, Liz Earle and Soap & Glory.

Walgreens Boots Alliance’s stock price closed at $86.28 per share on Tuesday, Dec. 20, up from $84.89 one year ago. Rite Aid’s stock closed at $8.61 up from $7.85 one year ago. Fred’s stock closed at $20.19 up from $16.25 one year ago.

— Nellie Day

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