Rite Aid investors OK buyout
$3b deal to create East Coast giant
HARRISBURG, Pa. -- Rite Aid Corp. shareholders yesterday overwhelmingly approved a deal worth almost $3 billion to buy more than 1,800 Brooks and Eckerd stores and become the largest drugstore operator on the East Coast.
Rite Aid, the nation's third-largest drugstore chain, sees the deal as a way to catapult it within reach of the rapidly growing drugstore leaders Walgreen Co. and CVS Corp. As drug retailers expand into other services, Rite Aid executives say the acquisition also will make the company a more attractive partner for in-store healthcare and wellness clinics and pharmacy-benefits managers.
The Federal Trade Commission is reviewing the deal. Rite Aid has said it expects to close the transaction shortly after the company's fourth quarter ends March 3.
Shareholders voted 404.1 million shares for and 9.1 million shares against acquiring the US Eckerd and Brooks operations of Canada's Jean Coutu Group Inc. for $1.45 billion and 250 million shares valued at about $1.5 billion. Rite Aid is also assuming $850 million in debt.
"The stronger we get, the more choices we have in the future," Mary Sammons, Rite Aid's president and chief executive, said after a shareholder meeting at a Harrisburg, Pa., hotel to disclose the voting results.
For Rite Aid, the deal marks its first major acquisition since a turnaround team arrived to bring the company back from the brink of bankruptcy seven years ago.
The deal would create a company of about 5,180 stores in 31 states and Washington, D.C., with revenue of nearly $27 billion, stores on both coasts, and major market shares in the New York City, Philadelphia, Pittsburgh, and Baltimore areas.
Rite Aid also will acquire six distribution centers. Jean Coutu will be the largest shareholder, with a 30.2 percent voting stake.