Fred’s to Buy 865 Rite Aid Locations

Transaction would move Fred’s to the housewares retailing forefront
December 21, 2016David Gill

WalgreensRiteAidFredslogo3x2MEMPHIS, Tenn.-Fred’s Inc. has reached an agreement with Walgreens Boots Alliance and Rite Aid to purchase 865 Rite Aid stores for $950 million.

The all-cash transaction involves Rite Aid locations in the eastern and western United States, and would move Fred’s to the housewares retailing forefront. Along with its pharmacy products and services, Walgreens, Rite Aid and Fred’s offer housewares such as small electrics, personal-care electrics and home environment products.

The Fred’s deal is schedules to take place several months after Walgreens’ acquisition of Rite Aid closes. The transaction currently is awaiting approval from the Federal Trade Commission, and Walgreens and Rite Aid are working to close their deal in early 2017. The agreement with Fred’s is Walgreens’ response to FTC concerns about the Rite Aid acquisition, according to a Walgreens statement.

The transaction will position Fred’s as the third largest drug-store chain in the United States, according to a Fred’s statement.

“This will be a transformative event for Fred’s Pharmacy that will accelerate our health-care growth strategy through our acquisition of 865 new stores located in highly attractive markets,” said Michael Bloom, Fred’s CEO.

Rite Aid currently operates nearly 4,600 stores in 31 states. If FTC requires the divestiture of more than the 865 stores, the purchase agreement requires Fred’s to acquire the additional stores. Fred’s will operate the stores under the Rite Aid banner for a transition period of undetermined length, Walgreens said.

The proposed acquisition of Rite Aid by Walgreens was announced in October 2015. “With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid,” said Stefano Pessina, executive vice chairman and CEO of Walgreens.

David GillDavid Gill | Senior Editor
dgill@hfnmag.com

David Gill covers home textiles, small electrics housewares, personal-care products, cleaning products, mattresses, consumer electronics and major appliances. He also reports on retailers and writes about the business and financial side of both vendors and retailers. He has more than 30 years of experience in business journalism, and has worked for other publications and websites that cover consumer products from both the manufacturer and retailer sides. His outside interests include sports (he is a big fan of the New York teams and of British soccer), cooking, movies and theater. He occasionally enjoys a good cigar as well.

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