Fred’s, Inc. (NASDAQ:FRED) has signed an deal with Walgreens Boots Alliance Inc (NASDAQ:WBA) and Rite Aid Corporation (NYSE:RAD) to buy 865 stores and certain assets linked to store operations based across the western and eastern United States for all cash deal amounting to $950 million. Closing of the deal is expected to take numerous months after Walgreens Boots’s proposed deal of Rite Aid is closed and is subject to agreement by the Federal Trade Commission and customary regulatory nod and closing conditions. However, there is no requirement for shareholder approval.
The deal, if approved, is aimed to in 1H2017 and will put Fred’s Pharmacy at the third positon in the market of drugstore chain in the U.S. and create a new countrywide competitor. Pertaining to this deal, the firm has obtained financing commitments to support the purchase price, transaction-related expenses, ongoing business activities and anticipated capital investments.
The management view
Michael K. Bloom, the CEO of Fred’s, said that it will be a transformative event for them that will boost their healthcare growth plan via acquisition of 865 stores based in highly attractive markets. They consider that this deal will even create tremendous prospects for both existing and new front of store and team members. They project to realizing the substantial advantages this deal will bring to patients, customers, payers, supplier associates, shareholders and team members.
Bloom added that they have been working for many months on integration programs to ensure a continuous transition for Rite Aid clients, patients, supplier partners and team members by leveraging their world-class leadership team’s considerable expertise in managing prime healthcare integrations and acquisitions. They assembled this experienced team in 2015, executed upgrades to their infrastructure in this year, and now, in coming year look forward to the continuous optimization of their business, supported by this milestone announcement.
Fred’s management consider the purchase of these stores will complement recent investments and even positively impact their business and enhance shareholder value.