In effort to save Rite Aid deal, Fred's lines up more money to buy stores
Pharmacy chain Fred's Inc. has secured more financing to buy Rite Aid Corp. stores, a key step in the effort to help Walgreens overcome antitrust concerns and win federal approval to purchase Rite Aid.
Tennessee-based Fred's, which operates in 15 southeastern states, informed the Securities and Exchange Commission on Monday that it agreed with lenders to increase store-purchase financing by $450 million, raising the total from $1.2 billion to $1.65 billion.
The move comes as reports late last week suggest that federal antitrust regulators might be poised to block Walgreens' purchase of Rite Aid.
Rite Aid's corporate headquarters are in East Pennsboro Township, Cumberland County.
A proposed $9-per-share acquisition of the pharmacy chain by Illinois-based rival Walgreens was announced in fall 2015, but the deal remains incomplete due to lingering antitrust concerns.
Neither company nor the Federal Trade Commission has commented on the reports.
Walgreens has about 8,200 stores nationwide. Rite Aid has about 4,600 stores in 31 states and the District of Columbia.
The new uncertainty has driven Rite Aid stock downward.
In the wake of news about possible FTC opposition, the company closed trading Friday at $3 per share, down from an opening price of $3.53. It dipped as low as $2.93 during the day. Monday's closing price was $3.
The original deal, as noted, proposed that Walgreens would acquire Rite Aid for $9 per share. But the company's stock lingered below $8 going into 2016.
By May of this year, as delays continued, Rite Aid corporate officials advised stockholders that they should expect $6.50 per share.