Categories: Media Moves

Coverage: Albertsons and Rite Aid cancel their merger

The Rite Aid pharmacy chain announced on Wednesday it had called off its proposed merger with Albertsons, the grocery retailer, after the deal appeared to lose the support of its shareholders.

Michael Corkery of the New York Times had the news:

The announcement came on the eve of a special meeting of Rite Aid shareholders to consider the merger. That meeting will not take place, the company announced.

“While we believed in the merits of the combination with Albertsons, we have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a stand-alone company,” said John T. Standley, the pharmacy chain’s chief executive.

The companies said they had mutually agreed to terminate the merger, and that neither would be responsible for any payments to the other side.

Albertsons said in a statement that it disagreed with “the conclusion of certain Rite Aid stockholders and third-party advisory firms” that the deal undervalued the drugstore chain, but would not alter the terms of the deal.

Lauren Hirsch of CNBC.com reported that large investors opposed the deal:

The $24 billion deal, announced in February, has faced push-back from a number of retail investors as well as top ten shareholder Highfields Capital Management. Critics have argued the deal provides Albertsons’ private equity owner, Cerberus Capital Management, a vehicle to take the company public without rewarding Rite Aid shareholders in turn.

Adding to mounting challenges, influential investor advisory firms Glass Lewis and Institutional Shareholder Services in July urged investors to vote against the tie-up.

Albertsons, though, said Wednesday it was unwilling to renogotiate the terms of the deal

“After careful consideration of all information available to our board of directors through today, we were unwilling to change the terms of the merger,” it said in a statement.

Nathan Bomey of USA Today reported that Rite Aid’s future remains unclear:

As its two biggest rivals, CVS and Walgreens, keep getting bigger and more diversified, Rite Aid was hoping to do the same by arranging a tie-up with Albertsons. Privately held Albertsons was hoping to use the deal to go public.

Rite Aid and Albertsons said late Wednesday that they had “mutually agreed” to kill their deal.

The deal’s demise reiterates questions about the future of Rite Aid as a standalone entity. The company has been scrambling to find its footing in recent years as pharmacies face cost pressures in the health care industry, including declining reimbursement funds.

“The termination of the merger with Albertsons leaves Rite-Aid at a big disadvantage as it neither has the scale nor the balance sheet to compete with much larger and well-capitalized rivals like CVS and Walgreens,” Moodys Vice President Mickey Chadha wrote.

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

Recent Posts

CNBC taps Sullivan as “Power Lunch” co-anchor

CNBC senior vice president Dan Colarusso sent out the following on Monday: Before this year comes to…

1 day ago

Business Insider hires Brooks as standards editor

Business Insider editor in chief Jamie Heller sent out the following on Monday: I'm excited to share…

1 day ago

Is this the end of CoinDesk as we know it?

Former CoinDesk editorial staffer Michael McSweeney writes about the recent happenings at the cryptocurrency news site, where…

2 days ago

LinkedIn finance editor Singh departs

Manas Pratap Singh, finance editor for LinkedIn News Europe, has left for a new opportunity…

3 days ago

Washington Post announces start of third newsroom

Washington Post executive editor Matt Murray sent out the following on Friday: Dear All, Over the last…

4 days ago

FT hires Moens to cover competition and tech in Brussels

The Financial Times has hired Barbara Moens to cover competition and tech in Brussels. She will start…

4 days ago