Rite Aid set for losses as Alberstons deal called off

Rite Aid looked set for heavy losses at the open on Thursday as it mutually agreed with Alberstons Companies to terminate a previously announced merger after Rite Air shareholders said the deal, which would have created a new company with around $83bn in annual sales, undervalued the group.

Rite Aid chief executive John Standley said: "We have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company.

"We will continue building momentum for key areas of our business like our innovative wellness store format, highly successful customer loyalty program and expanded pharmacy service offerings, as we also enhance our omni-channel and own brand offerings to strengthen our competitive position and create long-term value for stockholders."

Albertsons said in a separate statement that it believes the strategic rationale of the combination was compelling, including the $375m of cost synergies and $3.6bn of identified revenue opportunities.

"We disagree with the conclusion of certain Rite Aid stockholders and third-party advisory firms that although they acknowledged the strategic logic of the combination, did not believe that Albertsons Companies was offering sufficient merger consideration to Rite Aid stockholders.

"Consistent with Albertsons Companies’ disciplined approach to mergers and acquisitions, and after careful consideration of all information available to our board of directors through today, we were unwilling to change the terms of the merger."

Under the terms of the deal, Albertsons would have rebranded its in-store pharmacies under the Rite Aid name and would continue to operate some stand-alone Rite Aid pharmacies.

At 1240 BST, Rite Aid shares were down 9.2% in pre-market trade to $1.58.