Albertsons to buy (what's left of) RiteAid

lola42
Bronze Member
Bronze Member
Posts: 53
Joined: September 25th, 2016, 8:48 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by lola42 » March 30th, 2018, 5:37 pm

Rite Aid said the “waiting period under the Hart-Scott-Rodino Antitrust Improvements Act” has expired.

https://www.forbes.com/sites/brucejapse ... 9afe8568f8

pseudo3d
Valued Contributor
Valued Contributor
Posts: 2494
Joined: November 12th, 2015, 7:01 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by pseudo3d » April 14th, 2018, 3:46 pm

They're saying that some big Rite Aid shareholders will vote against the merger. Don't know if it will save Rite Aid's independence, but, and I may be wrong on this, with Rite Aid's price very low (which is more than it was on March 28, a $1.49, now $1.68, which may or may not be a dead cat bounce, but far less than even $2, which was it just prior to the announcement), it would make Rite Aid easy to purchase but wouldn't it make the resulting Albertsons stock worthless as well?

https://www.wsj.com/articles/rite-aid-s ... 1523543076

storewanderer
Valued Contributor
Valued Contributor
Posts: 3659
Joined: February 23rd, 2009, 3:54 pm
Contact:
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by storewanderer » April 14th, 2018, 10:56 pm

This deal with Albertsons is valuing the remaining Rite Aid Stores at less than $685,000 each. That also ignores whatever the value of Rite Aid's PBM Envision RX is. The stores sold to Walgreens sold for about $2 million each. Walgreens got far worse stores than what Rite Aid is left with which are the best and highest volume stores.

Albertsons is trying to ram this merger through ASAP so Rite Aid's true profitability once divesting off all the poor stores and paying off billions in debt is not revealed. Once revealed, Rite Aid stock would rise to at least double if not triple the current value. Rite Aid will be very profitable and will have per-store sales metrics favorable or even better than CVS and Walgreens.

I am also curious about divesting stores. I am sure some stores will have to be divested. The proceeds from selling the divested stores to CVS or Walgreens even if it is only 300 stores or something, might be more than the market cap of the entire Rite Aid Corporation right now.

The current Rite Aid share price is a view of what the "market" thinks Albertsons is worth. This is why Albertsons could never get its IPO off the ground. It is funny as Cerberus/Albertsons tried to push this same "reverse merger" thing on Safeway but the Safeway BOD refused it and insisted on the offer that ended up being made. The one that put the company many billions in debt and has prevented it from being profitable since the debt burden is simply too high (and taking Rite Aid from its shareholders will not change the fact that the company will continue to lose money due to too high of debt).

Has anyone ever seen a merger before where the share price of the company in question falls 40% after the merger is announced? I am sure there are examples but it isn't common.

Albertsons did just post a profit thanks to real estate sale-leaseback transactions, tax law benefits, and some other one time activities... at least, posted as such based on their unaudited financial statements.

My hat is off to Albertsons for trying to steal (I mean add) stores and grow their company (even if they aren't paying shareholders properly for such growth). Unlike Kroger who is not growing store count, canceling various new build marketplace stores, delaying remodels on stores that BADLY need remodels, selling off profitable and synergistic convenience stores......... it is really funny when the superior operator seems to want to spend (waste) its money on things other than what it does best: operating stores.

Super S
Valued Contributor
Valued Contributor
Posts: 1281
Joined: April 1st, 2009, 9:27 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by Super S » April 29th, 2018, 7:35 am

reymann wrote:
February 21st, 2018, 5:48 pm
i expect albertsons to retain thrifty ice cream and it could likely replace lucerne ice cream and maybe they tinker with the idea of thrifty ice cream by the scoop at albertsons/safeway stores in future remodels and new builds.
The new Albertsons they are building on Broadway in Boise is going to feature an ice cream counter. They are saying it pays homage to the original store on State Street having an ice cream counter, but it does make me wonder if they could end up testing the Thrifty Ice Cream concept. Thrifty did operate a store in Boise many years ago.

pseudo3d
Valued Contributor
Valued Contributor
Posts: 2494
Joined: November 12th, 2015, 7:01 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by pseudo3d » April 29th, 2018, 8:59 am

Super S wrote:
April 29th, 2018, 7:35 am
reymann wrote:
February 21st, 2018, 5:48 pm
i expect albertsons to retain thrifty ice cream and it could likely replace lucerne ice cream and maybe they tinker with the idea of thrifty ice cream by the scoop at albertsons/safeway stores in future remodels and new builds.
The new Albertsons they are building on Broadway in Boise is going to feature an ice cream counter. They are saying it pays homage to the original store on State Street having an ice cream counter, but it does make me wonder if they could end up testing the Thrifty Ice Cream concept. Thrifty did operate a store in Boise many years ago.
They're probably doing own brands. I'm sure I read about a Safeway having an ice cream counter in its deli area...

BillyGr
Platinum Member
Platinum Member
Posts: 357
Joined: October 5th, 2010, 7:33 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by BillyGr » April 29th, 2018, 12:27 pm

storewanderer wrote:
April 14th, 2018, 10:56 pm
This deal with Albertsons is valuing the remaining Rite Aid Stores at less than $685,000 each. That also ignores whatever the value of Rite Aid's PBM Envision RX is. The stores sold to Walgreens sold for about $2 million each. Walgreens got far worse stores than what Rite Aid is left with which are the best and highest volume stores.
I'm not sure that is completely the case.

Happened to be in NJ last weekend, and wound up stopping in 2 Rite Aid stores not that far from each other.

One is in a shopping plaza (with an empty former A&P that apparently re-opened as a Superfresh for a short time, this being the Superfresh name now owned by Key Foods). That one has the signs that the pharmacy is now operated by Walgreens. Not a huge store, and there is a Walgreens (in what is apparently a former supermarket) on a property surrounded on 2 sides by the plaza that has the Rite Aid, so one wouldn't suspect they will keep both open.

The second store (which is in a different town but only a short distance away on the opposite side of a major highway) is also an older store (and very small, maybe 8 aisles total) and that one did NOT have the Walgreens signage, so it is (apparently) one that is staying with Rite Aid.

No idea how representative that is of all the stores, but it may not be that all the ones left for Albertsons to buy would be new/large ones.

storewanderer
Valued Contributor
Valued Contributor
Posts: 3659
Joined: February 23rd, 2009, 3:54 pm
Contact:
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by storewanderer » April 29th, 2018, 6:49 pm

I don't think it is all great stores left for Rite Aid, but I know they sold off a ton of garbage stores in the Carolinas, Georgia, etc. to Walgreens. These stores were not necessarily in bad physical condition or even in poor locations, but customer traffic was virtually none and it was clear they were struggling. No way was the South a profitable region for them.

The ones in Utah, lousy performers in bad physical condition (1990 Osco interiors on most of them).

pseudo3d
Valued Contributor
Valued Contributor
Posts: 2494
Joined: November 12th, 2015, 7:01 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by pseudo3d » May 3rd, 2018, 9:16 pm

Apparently on April 24th, there was a shareholder that filed a lawsuit to block the merger. No idea if that would work (just on the basis of what Albertsons seems to want and would what make sense, I still think SuperValu would be better).

https://www.bna.com/rite-aid-investor-n57982091534/

storewanderer
Valued Contributor
Valued Contributor
Posts: 3659
Joined: February 23rd, 2009, 3:54 pm
Contact:
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by storewanderer » May 4th, 2018, 11:50 pm

pseudo3d wrote:
May 3rd, 2018, 9:16 pm
Apparently on April 24th, there was a shareholder that filed a lawsuit to block the merger. No idea if that would work (just on the basis of what Albertsons seems to want and would what make sense, I still think SuperValu would be better).

https://www.bna.com/rite-aid-investor-n57982091534/
I think Albertsons buying (or reverse merging with) Supervalu would have been a difficult FTC transaction due to the supplying of independents issue. Plus how it would impact a ton of independent grocers who may not want to buy from a large competitor, but at the same time may not have any other choice for a grocery wholesaler which is the case in much of the west... lot of independent grocers, suppliers, etc. who probably would have a lot of concerns. Rite Aid is easy pickings in comparison. Albertsons can probably make a big chunk of money divesting some Rite Aid stores off to make the FTC happy given how they are paying so little for each store... about 1/3 what Walgreens paid for each store purchased.

pseudo3d
Valued Contributor
Valued Contributor
Posts: 2494
Joined: November 12th, 2015, 7:01 pm
Status: Offline

Re: Albertsons to buy (what's left of) RiteAid

Post by pseudo3d » May 5th, 2018, 12:01 pm

storewanderer wrote:
May 4th, 2018, 11:50 pm
pseudo3d wrote:
May 3rd, 2018, 9:16 pm
Apparently on April 24th, there was a shareholder that filed a lawsuit to block the merger. No idea if that would work (just on the basis of what Albertsons seems to want and would what make sense, I still think SuperValu would be better).

https://www.bna.com/rite-aid-investor-n57982091534/
I think Albertsons buying (or reverse merging with) Supervalu would have been a difficult FTC transaction due to the supplying of independents issue. Plus how it would impact a ton of independent grocers who may not want to buy from a large competitor, but at the same time may not have any other choice for a grocery wholesaler which is the case in much of the west... lot of independent grocers, suppliers, etc. who probably would have a lot of concerns. Rite Aid is easy pickings in comparison. Albertsons can probably make a big chunk of money divesting some Rite Aid stores off to make the FTC happy given how they are paying so little for each store... about 1/3 what Walgreens paid for each store purchased.
Supposedly, either by a hidden list of stores or just because they don't care anymore, Albertsons cleared FTC for Rite Aid. But you're right, though, even if Albertsons got SpartanNash, C&S, and Associated on board to take over accounts, I can see a lot of independents unhappy with the idea of SuperValu going down. But at this rate, SuperValu and the accounts will probably go to those other companies.

Locked