Details from the Announcement

Albertsons, one of the nation’s largest grocery retailers, and Rite Aid, one of the nation’s leading drugstore chains, announced a definitive merger agreement under which privately held Albertsons will merge with publicly traded Rite Aid. Under the terms of the agreement, in exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive to receive one share of Albertsons common stock plus approximately $1.83 in cash or 1.079 shares of Albertsons stock. Depending on the results of the cash elections, shareholders of Rite Aid will own a 28.0%–29.6% stake in the combined company upon closing of the merger. Albertsons is backed by an investment consortium led by Cerberus Capital Management. Current Rite Aid Chairman and CEO John Standley will become CEO of the combined company, with current Albertsons Chairman and CEO Bob Miller serving as Chairman. Management of both companies believes the merger will benefit customers, employees and shareholders by enabling the combined entity to:

• Enhance the geographic footprint and create local networks in attractive geographies.
• Leverage the strong pharmacy network and Rite Aid’s pharmacy benefit management company, EnvisionRxOptions, to drive customer growth.
• Utilize data analytics and integrated loyalty programs to drive growth and target new customers.
• Combine strong own-brand portfolios with an extensive manufacturing and distribution network to drive revenue growth and operating efficiencies.
• Serve customers when, where and how they want to shop.

The combined company is expected to generate year one pro-forma revenues of approximately $83 billion and year one adjusted pro forma EBITDA of approximately $3.7 billion (including run-rate cost synergies). The combined company expects to deliver annual run-rate cost synergies of $375 million in approximately three years and access potential annual revenue opportunities of $3.6 billion. More than 60% of the cost synergies are expected to be realized within the first two years post-close. The transaction has been approved unanimously by the boards of directors of both companies. The merger is expected to close early in the second half of calendar year 2018, subject to approval by Rite Aid’s shareholders, regulatory approvals and other customary closing conditions.