NEW YORK — Grocer Albertsons Cos. will buy drugstore chain Rite Aid Corp. in a deal that would accelerate the remaking of the US retail and health care industries.
The takeover would serve several purposes:
Rite Aid would get a buyer after a failed merger with another chain last year.
Albertsons would add new locations and size, amid increasing pressure from online competitors.
And the grocer’s private-equity owners would exit their 2006 investment without having to go through an initial public offering of stock in a turbulent market.
The combined companies would have about 4,900 stores, including 4,350 pharmacy locations, in 38 states, they said Tuesday. The Albertsons pharmacies are to be rebranded under the Rite Aid name.
Retailers have been under growing pressure from online competitors like Amazon.com, and the corner drugstore has been no exception. While the prescription drug businesses at pharmacies has been relatively stable, front-of-the-store sales have been in decline. Giant retailers like Walmart Inc. are also looking to play a bigger role.
The result has been consolidation.
Last year, CVS Health Corp. agreed to pay about $68 billion for health insurer Aetna Inc., while The Wall Street Journal recently reported that Walgreens Boots Alliance Inc. is in early talks to buy drug distributor AmerisourceBergen Corp. Its takeover of Rite Aid was scaled back last year, for antitrust reasons.
The deals “demonstrate some of the threats (declining reimbursement, Amazon, etc.) that drug retailers have found themselves under and each of the large public players appears to be trying to solve this issue in a different way,” said Ross Muken, an Evercore ISI analyst.
Rite Aid shares rose 3.3 percent to $2.20 Tuesday.
The companies said the deal is expected to close in the second half of the year.
“Both players are under massive profit pressure, and there is no clear solution to their competitive/margin threats via this combination,” Muken said.
Rite Aid shareholders will have a choice whether to take all stock or a combination of stock and cash. After the transaction closes, Albertsons shareholders would own 70.4 percent to 72 percent of the business, the companies said.
The companies have a combined value of about $24 billion, including debt, according to The Wall Street Journal, which reported on the transaction earlier Tuesday.
The deal follows Rite Aid’s failed attempt to sell itself to Walgreens. That merger fell apart amid scrutiny by US antitrust authorities. Walgreens eventually won approval to buy 1,932 stores, three distribution centers, and related asset for $4.4 billion in September.
Rite Aid CEO John Standley will serve as chief executive of the new company; his counterpart at Albertsons, Bob Miller, will be chairman. A name for the new company has not been decided on.
Albertsons, which is backed by the private equity firm Cerberus Capital Management, last year put plans for an initial public offering on hold after Amazon acquired Whole Foods Market Inc., according to people familiar with the situation.
Cerberus acquired Albertson’s in 2006 and got more of the brand’s stores in a $3.3 billion deal with Supervalu Inc. in 2013. It later merged the business with Safeway, creating a grocery chain of 2,000 stores and 250,000 employees across the nation. It now has 2,323 stores and 280,000 workers.