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Rite Aid to buy Thrifty
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October 14, 1996: 9:30 a.m. ET
Stock deal would create chain of 3,500 drug stores nationwide
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NEW YORK (CNNfn) --Rite Aid has agreed to buy Thrifty PayLess in a stock deal valued at nearly $1.4 billion, not including the assumption of debt.
The combination would create a chain of 3,500 drug stores nationwide with revenues of $10 billion.
Rite Aid says the stock transaction will result in the elimination of some jobs among Thrifty PayLess headquarters personnel.
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 combined company would have been so dominant that it would have been able to unreasonably increase prices.
Rite Aid's Chief Executive Officer, Martin Grass, said the company would pay 0.65 of its shares for each Thrifty share, or about $23.30 a share in Rite Aid stock. The company will also assume about $890 million in Thrifty debt.
Rite Aid also said it will pull out of Alabama, Florida, Georgia, and North and South Carolina, initially selling 200 stores to Thrift Drug Inc., a division of J.C. Penney Co.
Grass said he expects the Thrifty acquisition to add "a few pennies" to per-share earnings in the year after the closing, which is scheduled to occur at the beginning of next year.
While shareholders have yet to vote on the acquisition, buyout firm Leonard Green & Partners and Kmart Corp. -- which together control 43 percent of Thrifty Payless stock -- have already agreed to vote in favor of it.
Rite Aid, based in Camp Hill, Pa. said it plans to close the Thrifty's headquarters in Wilsonville, Ore. 
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