Albertsons buys orphaned Rite Aid stores to form $24B joint venture

The grocery conglomerate will buy the 2.5k Rite Aid stores left over from Walgreens’ attempted full buyout.

February 21, 2018

The grocery conglomerate plans to buy the 2.5k Rite Aid stores left over from Walgreens’ attempted full buyout, which the federal government blocked last June.

Federal approval is still forthcoming, but if successful, the merger will create a company with over $82B in annual revenue and open the door for Albertsons to attempt an IPO again (they came close in 2015 but pulled the plug amidst “skittish” market conditions for retailers).

“Scale matters”

Chief execs of both companies feel the merger is the 2 companies’ only chance to compete with Amazon (which is pushing hard into food retail) and Walmart (which is beefing up its e-commerce). And, they’re not the only ones feeling the heat.

The S&P index for drug retail has fallen 11% in the past year, and the big 3 pharmacies are all scrambling to keep their footholds: In addition to Walgreens’ purchase of 2k Rite Aid stores, CVS has a $69B purchase of healthcare company Aetna currently under regulatory review.

The age of Albertaid

Alby’s purchase puts the companies’ joint valuation at $24B, with 4.9k stores and 4.3k pharmacies across the US — plus a new, yet-to-be-announced name for the partnership.

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