It could have been expected, after rival Walgreens Boots Alliance acquired over 1,900 Rite Aid pharmacies in September, that the remaining part of Rite Aid would be absorbed somewhere else, and disappear. Instead, Albertsons Companies, a leading supermarket operator, is swooping in to acquire the company (now valued at approximately $2.3 billion) and will use publicly traded Rite Aid as a springboard for Albertsons itself to become publicly traded. Intriguingly, the Rite Aid brand will now apply to many of Albertsons pharmacies; the combined company will have 4,350 pharmacies, and 4,900 stores in total. (Albertsons also owns the Safeway and Jewel-Osco supermarket chains; the Chicago Tribune reported that pharmacy operations at those brands will continue.)
Current Rite Aid chairman and CEO John Standley will become CEO of the combined company, with current Albertsons chairman and CEO Bob Miller serving as chairman. The combined company is expected to be comprised of leadership from both companies and will be dual headquartered in Boise, ID, and Camp Hill, PA. The name of the combined company will be determined by transaction close, expected in the latter half of this year.
The combined companies are expected to have a market value of $24 billion, and annual turnover of $83 billion. Some $375 million in cost synergies are hoped for, coming from combining food and pharmacy purchasing, partnering with payers in the Rite Aid PBM (EnvisionRx), and the benefits of the “omni-channel experience” as Albertsons puts it.
The net for the pharma industry is that more consolidation within retail pharmacy is occurring. When the Rite Aid/Walgreens deal was announced, Rite Aid obtained a right to source drug purchasing through Walgreens; it remains to be seen whether that will continue, or even be expanded to the Albertsons drug purchasing. With a rumored WBA-AmerisourceBergen merger being bruited, the CVS Health-Aetna merger, and with a hypothetical Amazon pharmacy business lurking in the background, pharma products are but one chess piece in a broader game.