Albertsons/Rite Aid Merger is off: What's next

[SoCalShopper1023]

https://www.cnbc.com/amp/2018/08/08/rit ... erger.html

[Jeff]

I would have loved this to have gone through. They could have combined my Vons and the Rite Aid next door to make a larger store.

[klkla]

The RiteAid investors felt like they were getting ripped off in the deal and they probably were.

Consumers weren't going to get much out of it, either.

And now Albertson's has to try and find another way to do their IPO.

[rwsandiego]

I would have loved this to have gone through. They could have combined my Vons and the Rite Aid next door to make a larger store.

Although there are no Rite-Aids in my market, if the only way to get rid of the bizarre store layouts was to merge with Albertsons then I was a supporter.

It is unfortunate that Albertsons lost the Osco-SavOn stores as part of the SuperValu merger, but I am not convinced that the RiteAid merger was the right way to get back into the drugstore market.

[babs]

I would have loved this to have gone through. They could have combined my Vons and the Rite Aid next door to make a larger store.

Although there are no Rite-Aids in my market, if the only way to get rid of the bizarre store layouts was to merge with Albertsons then I was a supporter.

It is unfortunate that Albertsons lost the Osco-SavOn stores as part of the SuperValu merger, but I am not convinced that the RiteAid merger was the right way to get back into the drugstore market.

The much more likely scenario would have been to move the pharmacy over to Vons and close the Rite Aid. These guys don't really have the cash to be doing costly store makeovers like this.

[storewanderer]

Well I am glad to see the right thing happened for once.

Cerberus also now knows what type of value Albertsons will IPO for. It will be very interesting to see what happens to Albertsons going forward also. Unless Cerberus wants to keep sitting on their investment (they can take big dividends out of the company and keep selling off real estate for a while...), I expect we will see a slice and dice. I think the better performing divisions of Albertsons could probably make for a good IPO but it would look suspiciously similar to the old Safeway.

Cerberus may actually be smarter to sell off one of the good assets (Jewel or NorCal) if they could get someone to pay a big enough premium for it, and use that cash to help pay off debt.

[Super S]

Honestly, I am glad this merger was called off.

Rite Aid, which let their acquired-from-PayLess stores go for a LONG time, has been doing some nice looking remodels as of late, and their new-build stores I have seen look good. While pricing is still a problem, the store experience has improved considerably.

Albertsons, on the other hand, has tried to run drug store chains such as Sav-On, and didn't do well. Albertsons, and (more so) Safeway, have some ugly looking stores right now which have been butchered up by cheap remodels and lighting upgrades. I can't imagine how they could have screwed up the latest Rite Aid remodels. Albertsons has a couple new stores planned in Idaho but is doing very little in that regard elsewhere.

Remembering the Haggen fiasco, and how Albertsons ended up getting some stores back (along with what was left of Haggen itself) has caused a situation in some areas, such as Baker City, Oregon, where they have effectively eliminated their competition. The Rite Aid merger would have caused a similar situation. Not only do they also have a store in Baker City, they share space with Albertsons and Safeway stores in many strip malls throughout the Pacific Northwest, and are located very close to others, in some cases across the street. A lot of people, including myself, have lost a lot of respect for Albertsons due to the greedy nature of some of these things. I would maybe have some respect if one of these mergers resulted in more competitive pricing, but that hasn't happened. I doubt that would have happened at Rite Aid either.

[pseudo3d]

Honestly, I am glad this merger was called off.

Rite Aid, which let their acquired-from-PayLess stores go for a LONG time, has been doing some nice looking remodels as of late, and their new-build stores I have seen look good. While pricing is still a problem, the store experience has improved considerably.

Albertsons, on the other hand, has tried to run drug store chains such as Sav-On, and didn't do well. Albertsons, and (more so) Safeway, have some ugly looking stores right now which have been butchered up by cheap remodels and lighting upgrades. I can't imagine how they could have screwed up the latest Rite Aid remodels. Albertsons has a couple new stores planned in Idaho but is doing very little in that regard elsewhere.

Remembering the Haggen fiasco, and how Albertsons ended up getting some stores back (along with what was left of Haggen itself) has caused a situation in some areas, such as Baker City, Oregon, where they have effectively eliminated their competition. The Rite Aid merger would have caused a similar situation. Not only do they also have a store in Baker City, they share space with Albertsons and Safeway stores in many strip malls throughout the Pacific Northwest, and are located very close to others, in some cases across the street. A lot of people, including myself, have lost a lot of respect for Albertsons due to the greedy nature of some of these things. I would maybe have some respect if one of these mergers resulted in more competitive pricing, but that hasn't happened. I doubt that would have happened at Rite Aid either.

Personally, I'm glad that Albertsons/Rite Aid was called off, mostly because at this point it was a distraction, and the company would've taken on even more debt, which would have made operations harder, and the stock price wouldn't go anywhere. It could have been rather grim. (Not to mention the idea of branding Rite Aid in areas that never had Rite Aid--yuck!)

Although with the Rite Aid merger called off, I wouldn't be surprised if they ended up trading some stores, or doing some sort of scaled-down license deal (like with Thrifty ice cream). And who knows what will end with Rite Aid now? (That's a question for another time).

[wnetmacman]

Although with the Rite Aid merger called off, I wouldn't be surprised if they ended up trading some stores, or doing some sort of scaled-down license deal (like with Thrifty ice cream).

The store tradeoff has already happened. Walgreens got the dog markets that Rite Aid never should have been in, such as Louisiana, Alabama, Mississippi, and other southern regions. Pretty much anywhere they bought out a name to expand, they shouldn't have. Several regional pharmacy chains have been eliminated, and all we have to show for it is a freaking Walgreens now *literally* on every corner.

Thrifty Ice Cream has no value outside the west coast. In K&B territory, bringing that ice cream back would have won customers, but that ship sailed a long time ago. Selling it would have to only include a regional customer who could use it and maximize on it.

Rite Aid, which let their acquired-from-PayLess stores go for a LONG time, has been doing some nice looking remodels as of late, and their new-build stores I have seen look good. While pricing is still a problem, the store experience has improved considerably.

This is more like a company-wide standard. Every acquired nameplate had a hodgepodge of new, old, and remodeled stores, but mostly old. There was no consistency to the method, and it seems to have ended their run in many of these locations.

Cerberus also now knows what type of value Albertsons will IPO for. It will be very interesting to see what happens to Albertsons going forward also. Unless Cerberus wants to keep sitting on their investment (they can take big dividends out of the company and keep selling off real estate for a while...), I expect we will see a slice and dice. I think the better performing divisions of Albertsons could probably make for a good IPO but it would look suspiciously similar to the old Safeway.

Cerberus seems to not learn many lessons in what not to buy or when to sell. I worked for a Cerberus-owned company, and investment from them was minimal. Head office was a revolving door, and nobody ever seemed to know which way was up.

Cerberus may actually be smarter to sell off one of the good assets (Jewel or NorCal) if they could get someone to pay a big enough premium for it, and use that cash to help pay off debt.

While Jewel is valuable, I don't see them selling the cash cow off first. I would see a split of the less profitable areas first as they did during the 2005 split.

[pseudo3d]

The store tradeoff has already happened. Walgreens got the dog markets that Rite Aid never should have been in, such as Louisiana, Alabama, Mississippi, and other southern regions. Pretty much anywhere they bought out a name to expand, they shouldn't have. Several regional pharmacy chains have been eliminated, and all we have to show for it is a freaking Walgreens now *literally* on every corner.

What I meant was mostly deals in the West Coast, like Albertsons taking over side-by-side Rite Aid locations, or Albertsons selling excess stores to Rite Aid (mostly acquired in the Haggen deal, though there are a few East Coast stores I can imagine that too). Not like expanding to Michigan or something like that.

Cerberus may actually be smarter to sell off one of the good assets (Jewel or NorCal) if they could get someone to pay a big enough premium for it, and use that cash to help pay off debt.

There wouldn't be much left of Albertsons/Safeway unfortunately, and the other markets are too small to get a chunk out of. Houston is a market in particular that isn't doing much but won't do much good to sell, with a lot of the valuable properties already closed or sold (LLC did a number on their divisions they owned). Spinning off the manufacturing arm I imagine would be the next step if things are going that way. As for debt, I believe they took on a bunch of debt to buy Rite Aid, and since it's not happening, they need to pay that back pronto.