Rite Aid Corporation (NYSE:RAD), one of the country’s major drugstore chains and Albertsons Companies, one of the country’s leading grocery retailers, reported a definitive merger deal under which privately held Albertsons will merge with Rite Aid.
Under the terms of the deal, in lieu for every ten shares of Rite Aid common stock, the shareholders of Rite Aid will have the right to choose to receive either a share of Albertsons common stock plus around $1.83 in cash or 1.079 shares of Albertsons stock. Based upon the outcomes of cash elections, upon completion of the merger, Rite Aid shareholders will own a 28% to 29.6% stake in the combined firm, and existing Albertsons shareholders will own a 70.4% to 72.0% stake in the combined firm on a fully diluted basis.
Just after completion of the merger and considering that all Rite Aid shareholders choose to receive shares and cash, Albertsons will have around 392.9 million shares outstanding on a fully diluted and pro forma basis. Following the completion of the deal and the share exchange, Albertsons shares are anticipated to trade on the NYSE.
Albertsons Companies is supported by an investment consortium headed by Cerberus Capital Management, L.P., which also comprises Kimco Realty Corporation, Lubert-Adler Partners LP, Schottenstein Stores Corporation and Klaff Realty LP.
Current Rite Aid Chief Executive Officer and Chairman John Standley will become CEO of the combined firm, with prevailing Albertsons Companies Chief Executive Officer and Chairman Bob Miller serving as firm’s Chairman. The combined firm is expected to be constituted of leadership from both firms and will be dual headquartered in Camp Hill, Pennsylvania and Boise, Idaho. The name of the merged firm will be decided by transaction close. This integrated firm will operate around 4,900 locations, 320 clinics and 4,350 pharmacy counters, across 38 states as well as Washington, D.C.
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