March 26, 2025
Business

Rite Aid to buy 2 major chains

NEW YORK – Rite Aid Corp., the nation’s third-largest drugstore chain, said Thursday it will purchase the U.S. Eckerd and Brooks operations of Canada’s Jean Coutu Group Inc. for about $2.55 billion in cash and stock.

The deal will make Rite Aid the largest drugstore chain operator on the East Coast, Rite Aid said. But it will still trail Walgreen and CVS nationally.

There are six Brooks stores in Maine, located in Bangor, Brewer, Waterville, Gardiner, Freeport and Kittery. There are no Eckerd stores in Maine.

Although the Brooks stores’ fates were officially uncertain, one local employee said they had been told that the store was likely to stay open.

Jody Cook, a Rite Aid spokesperson at company headquarters in Camp Hill, Pa., said during a telephone interview that the fate of individual stores couldn’t be decided until government regulators had their say.

But she said if stores closed, the customer accounts would be transferred to nearby stores and that patient service would be “seamless.”

Rite Aid plans to rebrand the acquired stores under the Rite Aid name.

“Adding these stores to our company gives Rite Aid scale comparable to our major drugstore competitors, and we believe this enables us to compete more effectively in a highly competitive business,” Rite Aid President and CEO Mary Sammons said in a statement.

Rite Aid will pay $1.45 billion in cash and 250 million shares valued at about $1.1 billion for Jean Coutu’s Brooks and Eckerd chains in the United States.

The shares will give Jean Coutu a 32 percent equity stake and 30.2 percent voting power in the expanded Rite Aid. In addition, Rite Aid will assume $850 million of long-term debt as part of the deal.

Jean Coutu announced in April 2004 that it would pay $2.38 billion for 1,539 Eckerd stores being sold by the retailer J.C. Penney Co.

The Rite Aid purchase has been approved by both companies’ boards, but it is subject to approval by antitrust regulators and Rite Aid shareholders.

The planned acquisition includes 1,858 drugstores – including 337 Brooks stores and 1,521 Eckerd stores – and six distribution centers, all located primarily on the East Coast and in the Mid-Atlantic states.

The stores being acquired are located in 18 states. Rite Aid operates in 14 of the states and the deal also will give it outlets in Massachusetts, Rhode Island, South Carolina and North Carolina.

Upon closing, there will be about 5,000 Rite Aid stores in 31 states and the District

of Columbia, with coverage on both the East and West coasts.

CVS Corp., based in Woonsocket, R.I., is the nation’s leader in terms of drug stores with more than 6,100, while Deerfield, Ill.-based Walgreen Co., with nearly 5,300 stores, is the leader by annual revenue at $42.2 billion.

The combined fiscal 2006 revenue of Rite Aid and

Jean Coutu’s U.S. operations were approximately $26.8 billion.

Rite Aid expects the deal will generate $150 million in savings in the first year after closing, and sees it adding to earnings 12 months after the close by 9 cents to 15 cents per share.

The company said it may complete the deal as early as its fiscal 2007 fourth quarter, which begins Dec. 3, 2006 and ends March 3, 2007.


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