Rite Aid Announces First Closings of Asset Sale to Walgreens Boots Alliance
November 27 2017 - 4:15PM
Business Wire
Rite Aid Corporation (NYSE: RAD) today announced that it has
completed the pilot closing and first subsequent closings under the
amended and restated asset purchase agreement entered into on
September 18, 2017, resulting in the transfer of 97 Rite Aid stores
and related assets to Walgreens Boots Alliance, Inc. (Nasdaq: WBA).
Under the amended and restated agreement, WBA will purchase a total
of 1,932 stores, three distribution centers and related inventory
from Rite Aid for an all-cash purchase price of $4.375 billion on a
cash-free, debt-free basis. Rite Aid and WBA expect to continue to
transfer ownership of the stores in phases over the coming months,
with the goal being to complete the store transfers in spring of
2018. The majority of the closing conditions have been satisfied,
and the subsequent transfers of Rite Aid stores and related assets
remain subject to minimal customary closing conditions applicable
only to the stores being transferred at such subsequent closing, as
specified in the asset purchase agreement.
“Successfully completing the pilot closing and first subsequent
closings marks an important step in realizing the full benefits of
this transaction,” said Rite Aid Chairman and CEO John Standley. “I
am proud of the entire Rite Aid team for their commitment and
dedication to helping us reach this milestone. I also want to thank
our team for their continued support as we complete the transfer
process over the next several months and implement our plans to
deliver improved results.”
Rite Aid expects to use a substantial majority of the net
proceeds from the transaction to repay existing indebtedness
thereby improving the company’s leverage levels. Additionally, Rite
Aid currently expects to incur a minimal cash tax payment on this
transaction, as the gain it will record on the sale of the assets
is expected to be largely offset by its net operating loss
carryforwards.
Rite Aid Corporation is one of the nation's leading drugstore
chains with fiscal 2017 annual revenues of $32.8 billion.
Information about Rite Aid, including corporate background and
press releases, is available through the company's website at
www.riteaid.com.
Cautionary Statement Regarding Forward Looking
Statements
Statements in this release that are not historical, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements
regarding the expected timing of subsequent closings of the sale of
Rite Aid stores and assets to WBA; the ability of the parties to
complete the subsequent closings for sale and related subsequent
transactions considering the various closing conditions; the
outcome of legal and regulatory matters in connection with the sale
of stores and assets of Rite Aid to WBA; the expected benefits of
the transactions such as improved operations, growth potential,
market profile and financial strength; the competitive ability and
position of Rite Aid following completion of the proposed
transactions; the ability of Rite Aid to implement new business
strategies following the completion of the proposed transactions
and any assumptions underlying any of the foregoing. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "should," and "will"
and variations of such words and similar expressions are intended
to identify such forward-looking statements. These forward-looking
statements are not guarantees of future performance and involve
risks, assumptions and uncertainties, including, but not limited
to, our high level of indebtedness and our ability to make interest
and principal payments on our debt and satisfy the other covenants
contained in our debt agreements; general economic, industry,
market, competitive, regulatory and political conditions; our
ability to improve the operating performance of our stores in
accordance with our long term strategy; the impact of private and
public third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; outcomes of
legal and regulatory matters; changes in legislation or
regulations, including healthcare reform; our ability to achieve
the benefits of our efforts to reduce the costs of our generic and
other drugs; risks related to the proposed transactions, including
the possibility that the subsequent transactions may not close,
including because a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of the transactions,
or may require conditions, limitations or restrictions in
connection with such approvals, the risk that there may be a
material adverse change of Rite Aid, or the business of Rite Aid
may suffer as a result of uncertainty surrounding the proposed
transactions; risks related to the ability to realize the
anticipated benefits of the proposed transactions; risks associated
with the financing of the proposed transaction; disruption from the
proposed transaction making it more difficult to maintain business
and operational relationships; the effect of the pending sale on
Rite Aid's business relationships (including, without limitation,
customers and suppliers), operating results and business generally;
risks related to diverting management's or employees' attention
from ongoing business operations; the risk that Rite Aid's stock
price may decline significantly if the proposed transaction is not
completed; significant transaction costs; unknown liabilities; the
risk of litigation and/or regulatory actions related to the
proposed transactions; potential changes to our strategy in the
event the proposed transactions do not close, which may include
delaying or reducing capital or other expenditures, selling assets
or other operations, attempting to restructure or refinance our
debt, or seeking additional capital, and other business effects.
These and other risks, assumptions and uncertainties are more fully
described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K, and in other documents that we file or furnish
with the Securities and Exchange Commission, which you are
encouraged to read. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. Accordingly, you
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. Rite Aid
expressly disclaims any current intention to update publicly any
forward-looking statement after the distribution of this release,
whether as a result of new information, future events, changes in
assumptions or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20171127005980/en/
Rite Aid CorporationINVESTORS:Byron Purcell,
717-975-5809investor@riteaid.comorMEDIA:Susan Henderson,
717-730-7766
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