RITE AID: Stock Climbs After Talk of Possible Transaction
Rite Aid Corp., the nation's third-largest drugstore chain, said yesterday it is discussing possible deals with other corporate players, leading many to speculate that all or part of the company could be sold, the Wall Street Journal reports. Representatives of the Camp Hill, PA-based company withheld specifics, reporting they are in the midst of "discussions involving possible corporate transactions that, if consummated, would be material." Spokespeople would not comment further. After an acquisition binge that included the second-largest pharmacy benefit manager, PCS Health Systems, and approximately 1,000 West Coast drug stores previously held by Thrifty Payless Holdings Inc., Rite Aid has encountered financial difficulty. Shares dropped 54% this year and in June, the company restated fiscal year-to-date profits down by 9%. Observers' predictions on the deal varied. One option could be selling its 21.8% stake in Drugstore.com, after its value soared in a July initial public offering (Berner/Lipin, 8/26). More ambitious alternatives include a sale of 250 to 350 West Coast stores, which are larger than many of the company's other stores and have performed poorly. The Los Angeles Times reports that the company may also be considering a merger, though that is "less likely." Potential suitors include supermarket chain Albertson's Inc., Longs Drug Stores Corp., Wal-Mart Stores Inc., Safeway Inc., Sears Roebuck & Co. or Kroger Co. Rite Aid officials have scheduled a Sept. 22 meeting with analysts (8/26). News of the possible transaction caused the company's stocks to soar 17%, rising $3.44 to close at $22.88 (New York Times, 8/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.