Rite Aid Corp., the nation's largest drugstore chain, has agreed to acquire West Coast competitor Thrifty PayLess Inc. for about $1.4 billion in stock.
The purchase, announced Monday, would create a chain of more than 3,500 drugstores in 26 states and the District of Columbia with annual revenue of about $10 billion.Thrifty PayLess currently operates 17 PayLess stores in the Salt Lake area.
Rite Aid's purchase comes six months after it abandoned a $1.8 billion deal to buy No. 2 Revco D.S. Inc. amid opposition from the Federal Trade Commission. The FTC said the combination would have been so dominant the company would have been able to unreasonably increase prices.
In buying Thrifty, Rite Aid announced it would sell about 200 drugstores in North Carolina and South Carolina to Thrift Drug Inc., a division of J.C. Penney Co. Also, the drugstore operator said it would pull out of Florida, Georgia and Alabama.
"After the acquisition, Rite Aid will operate in 25 of the top 50 metropolitan statistical areas in the United States, in 21 of which it will hold the No. 1 or No. 2 position," Martin Grass, chairman and chief executive of Rite Aid, said in a statement.
Under the terms of the stock-swap deal, Rite Aid will pay 0.65 share of its own stock for each Thrifty PayLess share. That comes to $1.38 billion using Friday's closing stock price. Rite Aid will also assume $890 million in Thrifty PayLess debt.
Rite Aid said it intends to close the Thrifty PayLess corporate offices in Wilsonville, Ore., and transfer its functions to Rite Aid headquarters in Camp Hill, Pa. It was not immediately clear whether any jobs would be lost through the combination.
Rite Aid operates 2,809 drugstores in 22 Eastern states and the District of Columbia. It has annual revenue of about $5.9 billion. Thrifty PayLess operates 1,007 drug stores in 10 states and has annual revenue of about $4.4 billion.
Rite Aid stock closed Friday at $35.871/2 a share, up 25 cents each, on the New York Stock Exchange. Thrifty PayLess Class B shares finished unchanged at $18.371/2 each.