Rite Aid to sell 865 stores to Fred's Inc for $950m

Rite Aid, which is currently in the process of being bought by Walgreens Boots Alliance, has agreed to sell 865 Rite Aid stores to Fred’s Inc for $950m in cash.

The deal is being entered into to satisfy certain concerns raised by the Federal Trade Commission in its review of Walgreens’ proposed acquisition of Rite Aid.

If approved, the transaction would establish Fred’s Pharmacy as one of the largest drugstore chains in the US, with significant presence in the South and on the East and West coasts.

Fred’s expects to continue to employ all store associates and certain field and regional associates related to the operations of the acquired stores on completion of the divestiture. Fred's Pharmacy would continue to operate the acquired stores under the Rite Aid banner during a transition period.

If the FTC requires divestiture of more Rite Aid stores and Walgreens agrees to sell them, the purchase agreement requires Fred's to purchase such additional stores.

Walgreens Boots said it expects to realise synergies in excess of $1bn from the acquisition of Rite Aid, within three to four years of closing of the merger.

Walgreens vice chairman and chief executive Stefano Pessina said: "With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid. We look forward to continuing to provide our customers and patients with the highest level of care and attention."

At 1425 GMT, Fred’s shares were up a whopping 40% to $15.50 in pre-market trade, while Rite Aid shares were up 6% to $8.68 and Walgreens was up 1.4% to $87.25.