Rite Aid Shareholders Approve Buying Brooks, Eckerd Stores
By Timothy C. Barmann, The Providence Journal, R.I.
Jan. 19–Shareholders of Rite Aid Corp. yesterday overwhelmingly approved the company’s acquisition of more than 1,800 Brooks and Eckerd drugstores, including 47 Brooks stores in Rhode Island.
More than 97 percent of the 414.3 million votes cast at a special shareholder meeting in Harrisburg, Pa., were in favor of the $3.8-billion deal, according to Rite Aid.
“We are extremely pleased with the outcome of today’s vote and appreciate the overwhelming support of our stockholders, who understand this is a unique opportunity to accelerate our growth strategy,” Mary Sammons, president and chief executive officer of Rite Aid, said in a statement. “We look forward to working with Brooks and Eckerd associates on a smooth integration and being able to fully realize the opportunities that lie ahead.”
Rite Aid has agreed to buy Jean Coutu Group USA, which operates 1,858 Brooks and Eckerd stores around the country from its headquarters in Warwick. The Coutu operation in Rhode Island is a subsidiary of Canada’s Jean Coutu Group.
The deal calls for Rite Aid to pay the Canadian firm $1.45 billion in cash, issue it 250 million Rite Aid shares, valued at about $1.5 billion, and assume $850 million of Coutu’s debt.
The deal is still under review by the Federal Trade Commission. Rite Aid said it is still expecting the deal to close shortly after the close of the company’s fourth quarter, which ends March 3. Rite Aid has said that antitrust regulators could require the company to sell some of its stores as a condition of approving the deal.
Neither company offered any new information yesterday about what the proposed deal will mean for the Rhode Island employees of the pharmacy company. About 600 people work at the Coutu headquarters in Warwick.
A spokeswoman for Coutu said it could not speak for Rite Aid’s intentions after the sale. Jody Cook, a spokeswoman for Rite Aid, said she did not have information about how the deal would affect employment.
Rite Aid has said the acquisition will allow it to boost profitability, in part through cost-cutting “in the areas of merchandising, purchasing, advertising and distribution as well as administrative expenses.”
It will rename the Eckerd and Brooks stores to Rite Aid.
The acquisition put an abrupt end to plans the Coutu Group had to greatly expand its presence in Rhode Island. The company constructed an office building in East Greenwich to serve as the Brooks-Eckerd headquarters, at a cost of nearly $30 million. The company planned to add up to 500 new jobs at the three-story facility.
The building is nearing completion, but Coutu employees may never work there. Coutu spokeswoman Helene Bisson said yesterday that the building will be put up for sale once the acquisition closes.
Rite Aid has indicated that it intends to keep its headquarters in Camp Hill, Pa., near where the company was founded in 1958 by a wholesale grocer.
Rhode Island officials had celebrated a 2004 deal that catapulted the state to the forefront of the U.S. drugstore business. Woonsocket-based CVS Corp., the largest U.S. drugstore chain by locations, and Coutu, owner of the Brooks chain, bought the Eckerd chain from J.C. Penney Co. and Rhode Island became the home of two of the four largest drugstore chains in the country.
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