Rite Aid, Albertsons waives merger agreement before voting

Rite Aid and the food Albertsons resigned from an agreement to become a single company with the deal as angry with future votes.

The owner of Safeway and other grocery stores announced in February that they would buy Rite Aids more than 2,500 stores with the goal of becoming “a leader in food, health and well-being.” But a large shareholder and two proxy advisory companies came out for the deal.

Rite Aid Chairman of the Board John Standley said in a prepared statement late Wednesday that, after hearing the shareholders’ views, the drug chain is “committed to moving forward and implementing our strategic plan as an independent company”.

Rite Aid also said that the Board will consider changes to the Board, although it did not elaborate.

The company canceled a shareholders meeting to vote on the agreement scheduled for Thursday. Both companies say that neither party will be responsible for payments due to the termination of the deal.

Private-owned Albertsons Companies, based in Boise, Idaho, offered either a share of their share and $ 1

.83 in cash or slightly more than one Alberton’s share for every 10 Rite Aid shares.

One of Rite Aid’s largest shareholders, Highfields Capital Management, said the deal was “in Albertson and Rite Aid, but not Rite Aid shareholders.” that it would vote its approximately 47 million shares against the deal.

Two prominent shareholders advisory companies – Glass Lewis & Co. and institutional shareholder services – also did not recommend any votes. Glas Lewis said the deal was “not critical of Rite AIDS’s profitability” and did not make any meaningful premium to investors.

Wall Street has also shown little confidence in the deal. The price of the Rite Aid share has mostly been lowered since the acquisition was announced in February.

Rite Aid, based in Camp Hill, Pennsylvania, will face major challenges that continue as a stand-alone company. The pharmacy chain has fought with high levels of debt and tough competition from major competitors, as narrowing pharmacy networks have driven customers away from their stores.

Earlier this week, Rite Aid said that it rethinked its budget forecast in 2019 because generic drug pricing was Designing what it expected in April when it first set expectations.

The nation’s largest drug chain Walgreens did not try to buy all Rite Aid last year, but managed to fight against regulatory opposition. In September, Walgreens Boots Alliance Inc. announced a narrower agreement to purchase almost 2000 Rite Aid sites and some distribution centers for approximately $ 4.38 billion.

Rite Aid had told shareholders last month that the Albertsons agreement would help scale scale and diversify as the Company handles challenges such as increased competition and pressure on drug subsidies.

Shares of Rite Aid dropped 19 cents to $ 1.55 in premarket trading Thursday.

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