Rite Aid to buy out Eckerd drug stores
NEW YORK (AP) — Rite Aid Corp., the nation’s third largest drugstore chain behind Walgreen and CVS, said Thursday it will purchase the U.S. Eckerd and Brooks operations of Canada’s Jean Coutu Group Inc. for about $2.55 billion in cash and stock.
The deal will make Rite Aid the largest drugstore chain operator on the East Coast.
Rite Aid will pay $1.45 billion in cash and 250 million shares valued at about $1.1 billion for Jean Coutu’s Brooks and Eckerd chains in the United States. The shares will give Jean Coutu a 32 percent common equity stake and 30.2 percent of the voting power in the expanded Rite Aid.
In addition, Rite Aid will assume $850 million of long-term debt as part of the deal.
The acquisition includes 1,858 drugstores — including 337 Brooks stores and 1,521 Eckerd stores — and six distribution centers, all located primarily on the East Coast and in the Mid-Atlantic states.
The deal has been approved by both companies’ boards.
Upon closing, there will be about 5,000 Rite Aid stores in 31 states and the District of Columbia, with coverage on both the East and West coasts. The stores Rite Aid will acquire are located in 18 states, with Rite Aid currently operating in 14 of the states and adding Massachusetts, Rhode Island, South Carolina and North Carolina to its national footprint.
All of the stores will be re-branded as Rite Aid, and Rite Aid headquarters will remain in Camp Hill, Pa.
The combined fiscal 2006 revenue of Rite Aid and Jean Coutu’s U.S. operations were approximately $26.8 billion.
“Adding these stores to our company gives Rite Aid scale comparable to our major drugstore competitors, and we believe this enables us to compete more effectively in a highly competitive business,” Rite Aid President and CEO Mary Sammons said. “Successfully integrating these stores requires a strong infrastructure like the one we have built at Rite Aid, with information systems and a supply chain already capable of supporting a significant increase in the number of stores.”
The deal will make Rite Aid the largest drugstore chain operator on the East Coast.
Rite Aid will pay $1.45 billion in cash and 250 million shares valued at about $1.1 billion for Jean Coutu’s Brooks and Eckerd chains in the United States. The shares will give Jean Coutu a 32 percent common equity stake and 30.2 percent of the voting power in the expanded Rite Aid.
In addition, Rite Aid will assume $850 million of long-term debt as part of the deal.
The acquisition includes 1,858 drugstores — including 337 Brooks stores and 1,521 Eckerd stores — and six distribution centers, all located primarily on the East Coast and in the Mid-Atlantic states.
The deal has been approved by both companies’ boards.
Upon closing, there will be about 5,000 Rite Aid stores in 31 states and the District of Columbia, with coverage on both the East and West coasts. The stores Rite Aid will acquire are located in 18 states, with Rite Aid currently operating in 14 of the states and adding Massachusetts, Rhode Island, South Carolina and North Carolina to its national footprint.
All of the stores will be re-branded as Rite Aid, and Rite Aid headquarters will remain in Camp Hill, Pa.
The combined fiscal 2006 revenue of Rite Aid and Jean Coutu’s U.S. operations were approximately $26.8 billion.
“Adding these stores to our company gives Rite Aid scale comparable to our major drugstore competitors, and we believe this enables us to compete more effectively in a highly competitive business,” Rite Aid President and CEO Mary Sammons said. “Successfully integrating these stores requires a strong infrastructure like the one we have built at Rite Aid, with information systems and a supply chain already capable of supporting a significant increase in the number of stores.”
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