Published: Wed, December 21, 2016
Economy | By Melissa Porter

Rite Aid to sell 865 stores to Fred's Inc for $950m

Rite Aid to sell 865 stores to Fred's Inc for $950m

Rite Aid Corp said it would sell 865 stores to Fred's Inc for $950 million to satisfy antitrust concerns over its proposed takeover by Walgreens Boots Alliance Inc.

Walgreens and Rite Aid will officially name the locations of the divested stores when the U.S. Federal Trade Commission approves the merger and divestiture plan.

Walgreens is in discussions with the FTC and hopes to close on its acquisition of Rite Aid in early 2017. Headquartered in Memphis, Tenn., Fred's was founded in Coldwater, Miss., in 1947 and operates over 650 stores, mostly in rural areas and mid-sized town in the Southeast.

Deerfield, Ill. -based Walgreen's announced plans to acquire Rite Aid in October of 2015 for $17.2 billion.

"This will be a transformative event for Fred's Pharmacy that will accelerate our healthcare growth strategy through our acquisition of 865 new stores located in highly attractive markets", Michael Bloom, chief executive officer of Fred's, said in a statement.

The companies said the Rite Aid stores that Fred's has agreed to buy are generally in the South and on the East and West coasts. The biggest percentage gain was 35% on May 22, 1996 and the most-active day was the 10.4 million shares that changed hands in the stock's debut on March 19, 1992.

Walgreens shares were trading more than 1 percent higher in early trading Tuesday.

"We are pleased to have found an experienced pharmacy operator for these stores", said Walgreens Boots Alliance CEO Stefano Pessina. Rite Aid, based in Camp Hill, Pennsylvania, has almost 4,600 stores in 31 states.

Of Fred's current 647 stores in 15 states, a majority are located in six states (which Fred's calls its core markets), with the most in MS, followed by Georgia, Tennessee, Alabama, Louisiana and Arkansas, respectively.

Rite Aid and Walgreens were widely expected to divest stores in states where the combined company would have a particularly strong position.

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