Rite and Albertsons have called an abrupt end to their planned merger. Late Wednesday the two retailers announced they would call of the deal because of the pushback that has been received from shareholders that have complained it had undervalued Rite Aid.
The merger would have created an entity with annual sales of approximately $83 billion with over 4,900 locations across the U.S.
CEO of Rite Aid John Standley said in a prepared statement that the company had heard views that its stockholders had expressed and was committed to moving ahead and carrying out the company’s strategic plan alone.
Albertsons in a separate prepared statement said that it did not agree with certain stockholders of Rite Aid and third party firms that it had not offered enough to the investors of the pharmacy chain. The grocery store chain, the statement added, is not willing to change the merger’s terms.
Rite Aid announced the cancellations of a special meeting of shareholders related to the deal that was scheduled for Thursday.
One analyst in the global retail industry said the proposed merger had been based upon overly optimistic views.
He added that there was some truth to the thought that this deal would have given Albertsons much more scale in the hyper-growth health and pharmacy space, and it would have given the grocery store chain access to geographic areas that it currently does not serve with a pharmacy offer.
He concluded by saying that the two were not compelling reasons to have a costly and complex merger.
Walgreen attempted to buy Rite Aid during 2015, but regulators blocked that plan due to antitrust problems. During September of 2017, the two companies outlined their scaled back plan for close to 2,000 Rite Aid locations, leaving Rite Aid with approximately 2,600 stores.
The analyst said that Rite Aid’s future is now in question. After the stores it sold off to Walgreens, it is lacking scale. Given scale is more critical now than at any time ever in today’s pharmacy and health market there is no doubt it will be looking for another entity that it can combine forces with.