Rite Aid completes acquisition of Brooks and Eckerd

HARRISBURG - Rite Aid Corp. said yesterday that it had completed a $4 billion cash-and-stock acquisition of more than 1,850 Brooks and Eckerd drugstores and six distribution centers in a bid to keep up with its rapidly growing competitors.

Rite Aid, the nation's third-largest drugstore chain, will expand its already strong presence on the East Coast, although some analysts have criticized the price being paid for underperforming stores.

The acquisition is Rite Aid's first major deal after a turnaround team arrived late in 1999 to pull the Camp Hill, Pa., company from the brink of bankruptcy.

"Today, we are a bigger, stronger company, and we're in a much better position to take advantage of growth in the drugstore sector," Rite Aid chief executive officer Mary Sammons said in a telephone interview.

Sammons, who was part of the turnaround team, was appointed chairwoman yesterday, taking over for Bob Miller, who will remain on the board.

Under the deal, Rite Aid is paying $2.36 billion in cash and issuing 250 million shares of stock for the U.S. Eckerd and Brooks operations of Canada's the Jean Coutu Group Inc.

Shares of Rite Aid rose 19 cents to close at $6.55 on the New York Stock Exchange.

The acquisition, announced last summer, made Jean Coutu Group the largest Rite Aid shareholder, with about 32 percent of common stock and about 30 percent of voting power.

With the Brooks and Eckerd buyouts complete, Rite Aid will operate about 5,160 stores in 31 states and Washington, although it has said it will close up to 200 stores to avoid overlap.

Jobs will be available for all affected store employees, although some employees from Jean Coutu's U.S. headquarters in Warwick, R.I., will be let go, Sammons said.

CVS Corp., of Woonsocket, R.I., is currently the industry leader, with more than 6,160 drugstores. Walgreen Co., of Deerfield, Ill., is second, and operates more than 5,700 stores.