Local news. Locally owned.

Albertsons/Rite Aid merger faces challenge ahead of key vote

Regence Blue Shield of Idaho
Idaho Business pres. by My 102.7
A week from Friday, shareholders of Rite Aid Corp. will decide if the independent pharmacy retailer can merge with Boise-based Albertsons Companies.

If 50% say yes – the deal is likely to happen. If it can’t reach that threshold, the next steps for the two companies are unclear.

  • Advisors say no: Two big shareholder advisory firms said a no vote was appropriate. Institutional Shareholder Services & Glass Lewis gave the tie-up a thumbs down.
    • ISS report: “It does not appear that Rite Aid shareholders would receive a fair ownership interest in the combined company, a concern heightened by potential conflicts of interest during the negotiation process and apparently reflected in the company’s underperformance since announcement.”
    • Glass Lewis: “We fail to see that the proposed combination represents a particularly attractive outcome for unaffiliated Rite Aid shareholders, each of whom has, in our view, been offered very little reason to conclude that management has secured full value under extant market conditions or that the Company would not benefit from continued implementation of its stand-alone operating strategy until a counterparty is prepared to deliver a clear and attractive value for control of Rite Aid,”
    • A Rite Aid spokesperson disagreed, telling Reuters the deal “will significantly improve Rite Aid’s growth prospects, financial strength and ability to deliver compelling long-term value for shareholders.”
  • Other shareholders against: Highfields Capital Management came out earlier this month and said it would vote its 4.4% stake against the deal. “The proposed transaction is in the best interests of Albertsons and Rite Aid management, but not Rite Aid shareholders,” Highfields said.
  • It’s about scale: The two companies have mounted a detailed campaign to gin up support for the deal – with an extensive website and letters to Rite Aid shareholders ahead of the vote.
    • Albertsons COO Jim Donald on CNBC: “Scale is big here. Scale is what we can use as we continue to [serve] customers online and  brick and mortar.”
  • Amazon looms: With the pending merger of Albertsons and Rite Aid on the table, Amazon announced it would acquire small prescription-by-mail company PillPack – one of a number of moves the web giant has taken in the drug space.
  • E-commerce perks up:  Albertsons said on a recent earnings call that sales from e-commerce more than doubled from the previous period – up 108%. The company has been working to drive initiatives – including home delivery, “Drive Up and Go,” meal delivery service Plated and a partnership with Instacart.
- Story continues below ads -
The Sundance Company
Fast in the Morning Wild 101
- Story continues below ads -
Boise Regional Realtors
Paddles Up Poke

Love our stories? Get them delivered straight to your inbox each afternoon. Plus, support BoiseDev's independent journalism.

Popular

Micron continues large-scale revamp of Boise campus with latest project

Boise-based Micron Technology continues its large-scale revamp of the Boise campus. A newly-issued building permit shows the tech. giant...

Report: Boise tech firm Clearwater Analytics considers sale or other options

Clearwater Analytics, a Boise-based firm that helps companies with financial software solutions, could soon find new owners. Reuters reports...

Related

Albertsons exec joins Boise VC firm StageDotO

Former Albertsons Companies Executive VP Andy Scoggin will join Boise venture capital firm StageDotO as a partner. "I first...

Albertsons latest retailer to start requiring masks nationwide

Boise-based Albertsons Companies will soon start requiring mask usage in all its stores nationwide. The retailer operates stores under its own name,...
Holland and Hart

Latest

Local gyms posting they might have to close. What the health department says

You might have seen pleas from gyms across Ada County asking customers to tell the local borad of health not to shut...

You asked: What’s the status of the new WinCo at Chinden and Linder in Meridian?

It's a big project that will add a major grocery destination to North Meridian. But when will construction start? It's...

Note from Don: BoiseDev to add Margaret Carmel to report on a changing Boise and Treasure Valley

I’m pleased to welcome Margaret Carmel to the BoiseDev team, starting August 24th. Margaret covers the City of Boise...

Report: Boise tech firm Clearwater Analytics considers sale or other options

Clearwater Analytics, a Boise-based firm that helps companies with financial software solutions, could soon find new owners. Reuters reports...

Project would tuck condos onto site of single-family home

A proposal to add 16 condos on the site of a single-family home will go through the City of Boise's planning process...

Boise, McLean name building award winners: affordable housing, Boise State, Ronald McDonald House & more

The City of Boise announced the 2020 Building Excellence Award winners. They allocate the awards to people, businesses and organizations who helped...