Albertsons Companies merges with portion of Rite Aid

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Rite Aid Corp. said earlier this year that it runs around 4,400 stores.

After the deal closes, Albertsons' shares will be listed on the New York Stock Exchange.

Albertsons is a privately held company and Rite Aid is public.

The integrated company will operate approximately 4,900 locations, 4,350 pharmacy counters and 320 clinics across 38 states and Washington, D.C., serving more than 40 million customers per week.

The deal includes the more than three dozen Rite Aid stores across the Buffalo Niagara region.

It will have 4,892 stores in all, and 4,345 pharmacies. "Amazon is making a big push into food retail with its purchase of Whole Foods Market Inc".

The result has been consolidation. The remainder of Rite Aid's stores - around 2,000 locations - will be sold to Walgreens Boots Alliance under an agreement reached with federal regulators, which blocked a full merger of the two companies back in 2015. Rite Aid reported revenue of $32.8 billion in its most recent fiscal year, which ended in March.

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The deals "demonstrate some of the threats (declining reimbursement, Amazon, etc.) that drug retailers have found themselves under and each of the large public players appears to be trying to solve this issue in a different way", said Ross Muken, an analyst with Evercore ISI. With Albertons' e-commerce capabilities at its disposal, Rite Aid could become an online shopping destination for food and other products.

The deal follows Amazon.com Inc's AMZN.O move to team up with Berkshire Hathaway Inc BRKa.N and JPMorgan Chase & Co JPM.N to form a not-for-profit company to provide health care for their employees, challenging the existing US healthcare system.

"Both players are under massive profit pressure, and there is no clear solution to their competitive/margin threats via this combination", Muken said. Franklin Resources Inc has invested 0.04% in Rite Aid Corporation (NYSE:RAD).

Shareholders of Albertsons would hold roughly 71% of the combined company, while Rite Aid investors would own the rest. The combination of Albertsons Companies' billion dollar own brands, including O Organics and Lucerne, and its manufacturing and operating capabilities, with Rite Aid's own brands in health and wellness, including B4Y and Daylogic, and its pharmacy expertise will allow the combined company to drive growth opportunities and efficiencies across its purchasing, marketing, manufacturing and merchandising functions. A debt-laden distant third behind Walgreens and CVS Health in the prescriptions market, Rite Aid has a market share only one third that of either rivals, according to Pembroke Consulting. That merger fell apart amid scrutiny by US antitrust authorities.

According to a company press release, the combined company is expected to serve more than 40 million USA customers per week at approximately 4,900 locations, 4,350 pharmacy counters, and 320 health clinics across 38 states and Washington D.C. It is expected to generate revenues of $83 billion.

Equitec Proprietary Markets Llc decreased Rite Aid Corp (Call) (RAD) stake by 87.25% reported in 2017Q3 SEC filing. The name of the combined company will be determined by transaction close. It later merged the business with Safeway Inc., creating a grocery chain of 2,000 stores and 250,000 employees across the U.S. It now has about 2,323 stores and 280,000 workers.

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