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Albertsons Proposes Merger with Rite Aid

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Albertsons proposes merger with Rite Aid

On February 20, 2018, privately held Albertsons Companies announced its intention to merge with one of America’s leading drugstore chains, Rite Aid (RAD). The deal only includes Rite Aid assets that haven’t already been sold to Walgreens (WBA).

Rite Aid agreed to sell 1,932 stores and three distribution centers to Walgreens in September last year. The current deal is about RAD’s remaining 2,569 stores and its PBM (pharmacy benefit manager) business.

The combined company is projected to generate $83 billion in total revenues in its first year. Read part two to know more about the combined company. Albertsons Companies’ stock will be listed on the New York Stock Exchange once the deal closes.

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Basics of the deal

Albertsons has given Rite Aid’s shareholders two choices. For every ten Rite Aid shares, they can either choose to receive one share of Albertsons stock along with $1.83 in cash, or 1.08 shares of Albertsons stock. Read part three to know more about the terms of the deal.

The proposed deal has several strategic and financial benefits including cost synergies of $375 million and potential revenue opportunities of $3.6 billion. Read part four of this series for more about the synergies and benefits arising from the merger.

Changing Pharma Industry

The last two to three months have witnessed some important mergers and acquisitions in the US drug retail space. In fact, the industry saw one of its biggest deals in history when pharmacy giant CVS Health (CVS) proposed the acquisition of insurer Aetna (AET) in December. Then came the rumors about Walgreens Boots Alliance (WBA) being in talks to acquire drug distributor AmerisourceBergen (ABC). The latest on the list is the RAD-Albertsons proposed merger.

To know more about the changing drug pharma landscape, read the last part of this five-part series.

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