Fred's, Inc. FRED shares — which never really recovered from a mid-2017 slump following the termination of Walgreens Boots Alliance Inc WBA's deal to buy Rite Aid Corporation RAD — are trading up Monday.
The termination deprived Fred's of an opportunity to buy up to 865 Rite Aid stores, which was a necessary condition for the deal to gain antitrust approval.
Fred's shares were soaring 61.47 percent to $2.64 at the time of publication Monday.
What Happened
Regional pharmacy chain Fred's and larger rival Walgreens announced that the latter will buy pharmacy patient prescription files and the related pharmacy inventory of 185 Fred's stores located across 10 Southeastern states.
Walgreens will pay Fred's $165 million as part of the agreement, subject to adjustment, plus an amount equal to the value of related pharmacy inventory.
Why It's Important
Fred's said the deal is a part of its previously announced plan to unlock shareholder value by monetizing non-core assets through strategic transactions.
"With this agreement, we have taken a major step towards achieving one of our main goals of eliminating our debt balance," said Joe Anto, interim CEO and CFO at Fred's.
What's Next
Both companies expect the file transfers to begin in the fourth quarter of 2018 and wrap by the first quarter of 2019.
Fred's said it will continue to operate its retail stores at most locations where it has agreed to sell pharmacies. Following the completion of the transaction, Fred's will continue to operate about 162 pharmacies across nearly 600 stores.
Related Links:
Goldman Sachs Bearish On Standalone Rite Aid
With Rite Aid Uncertainty Behind It, Could Walgreens Go Shopping?
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
