Albertsons Companies To Merge With Rite Aid - Quick Facts

(RTTNews) - Privately-held Albertsons Companies will merge with drugstore chain Rite Aid Corp. (RAD) to create a leader in food, health, and wellness, the companies announced. The combination will also create strong local networks in attractive geographies.

Under the terms of the agreement, in exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive either (i) one share of Albertsons Companies common stock plus about $1.83 in cash or (ii) 1.079 shares of Albertsons Companies stock.

Depending upon the results of cash elections, upon closing of the merger, shareholders of Rite Aid will own a 28.0 to 29.6 percent stake in the combined company, and current Albertsons Companies shareholders will own a 70.4 to 72.0 percent stake in the combined company on a fully diluted basis.

Following the merger, current Rite Aid Chairman and CEO John Standley will serve as CEO and Albertsons Chairman and CEO Bob Miller will serve as chairman of combined company.

The board of directors will be comprised of nine directors, with four each to be named from Albertsons Companies and Rite Aid. Lenard Tessler will serve as Lead Director.

The deal is expected to generate run rate cost synergies of $375 million and create incremental revenue opportunities of over $3.6 billion. The combined company is expected to generate pro forma 2018 revenues of $83 billion.

Following the close of the transaction and the share exchange, Albertsons Companies' shares are expected to trade on the New York Stock Exchange.

The transaction has been approved unanimously by the boards of directors of both companies. The merger is expected to close early in the second half of calendar year 2018, subject to the approval of Rite Aid's shareholders, regulatory approvals, and other customary closing conditions.

Credit Suisse and Goldman Sachs & Co. LLC served as lead financial advisors to Albertsons Companies and Schulte Roth & Zabel LLP acted as legal advisor. Bank of America Merrill Lynch also served as financial advisor to Albertsons Companies and is providing committed financing for the proposed transaction together with Credit Suisse and Goldman Sachs.

Citi served as exclusive financial advisor to Rite Aid, and Skadden, Arps, Slate, Meagher and Flom LLP acted as legal advisor.