U.S. grocer Albertsons said Tuesday it will buy drugstore chain Rite Aid in deal that will create a retail giant worth about $24 billion with annual revenues of $83 billion in its first year, according to the company. The deal will also catapult the retailer into a pharmacy behemoth serving 40 million customers in 38 states.
Albertsons will rebrand most of its pharmacies as Rite Aid and will continue to operate Rite Aid stand-alone pharmacies as well. In total the new company will have 4,350 pharmacy counters. Current Rite Aid Chairman and Chief Executive Officer John Standley will become CEO of the combined company, which will chase “higher-value pharmacy customers,” the company said.
News of Rite Aid’s merger with Albertsons is the latest to impact the pharmacy industry. CVS Health announced it would buy Aetna, America’s third-largest health insurer, for $69 billion.
The merger comes in the midst of Rite Aid’s deal to transfer stores to Walgreens Boots Alliance, the nation’s largest pharmacy chain. Earlier this month Rite Aid said it had transferred more than 1,100 stores and related assets to Walgreens, part of the larger deal in which the latter is buying 1,932 stores for nearly $4.4 billion. Rite Aid attempted to sell all its stores to Walgreens in 2015, but the Federal Trade Commission nixed the plan on antitrust grounds.
Rite Aid shareholders will have the right to accept payment in either an all-stock or cash-and-stock deal. Current Alberstons shareholders will own a 70.4% to 72% stake in the new company.