Rite Aid To Buy Thrifty Payless Inc.
Rite Aid Corp., the nation’s largest drugstore chain, has agreed to acquire West Coast competitor Thrifty PayLess Inc. for about $1.4 billion in stock.
The purchase, announced Monday, would create a chain of more than 3,500 drugstores in 26 states and the District of Columbia with annual revenue of about $10 billion. The news pushed Thrifty’s stock up 20 percent in early trading today.
Rite Aid’s purchase comes six months after it abandoned a $1.8 billion deal to buy No. 2 Revco D.S. Inc. amid opposition from the Federal Trade Commission. The FTC said the combination would have been so dominant the company would have been able to unreasonably increase prices.
There are 12 PayLess Drug Stores in Spokane and one in Coeur d’Alene. The company also has stores in Moses Lake, Moscow, Pullman, Lewiston, Walla Walla and the Tri-Cities.
District Manager Bob Goodrich said he didn’t know what effect the take over would have on area stores.
Because Thrifty is concentrated in the West, Rite Aid, which has most of its stores in the East, stands less of a chance of running afoul of federal regulators.
Rite Aid announced it would sell about 200 drugstores in North Carolina and South Carolina to Thrift Drug Inc., a division of J.C. Penney Co.
Also, the drugstore operator said it plans to pull out of Florida, Georgia and Alabama, but did not announce any sale agreements. The drug store chain has been leaving areas where it doesn’t have enough stores to negotiate lower prices from drug makers.
“After the acquisition, Rite Aid will operate in 25 of the top 50 metropolitan statistical areas in the United States, in 21 of which it will hold the No. 1 or No. 2 position,” Martin Grass, chairman and chief executive of Rite Aid, said in a statement.
Under the terms of the stockswap deal, Rite Aid will pay 0.65 share of its own stock for each Thrifty PayLess share. That comes to $1.38 billion using Friday’s closing stock price. Rite Aid will also assume $890 million in Thrifty PayLess debt.
Rite Aid said it intends to close the Thrifty PayLess corporate offices in Wilsonville, Ore., and transfer its functions to Rite Aid headquarters in Camp Hill, Pa.
Some 740 jobs will be cut in Wilsonville, saving $65 million a year.
Rite Aid operates 2,809 drugstores in 22 Eastern states and the District of Columbia. It has annual revenue of about $5.9 billion. Thrifty PayLess operates 1,007 drug stores in 10 states and has revenue of about $4.4 billion.
Rite Aid stock was down $1 per share at $34.87-1/2 on the New York Stock Exchange this morning. Thrifty PayLess Class B shares rose $3.62-1/2 to $22 on the NYSE.
, DataTimes