HARRISBURG, Pa. - Rite Aid Corp. shareholders on Thursday overwhelmingly approved a deal worth almost $3 billion to buy more than 1,800 Brooks and Eckerd stores and become the largest drugstore operator on the East Coast.
Rite Aid, the nation's third-largest drugstore chain, has billed the deal as a way to catapult it within reach of the rapidly growing drugstore leaders Walgreen Co. and CVS Corp. As drug retailers expand into other services, Rite Aid executives say the acquisition also will make the company a more attractive partner for in-store health care and wellness clinics and pharmacy benefits managers.
Shareholders voted 404.1 million shares for and 9.1 million shares against acquiring the U.S. Eckerd and Brooks operations of Canada's Jean Coutu Group Inc. for $1.45 billion in cash and 250 million shares valued at about $1.5 billion. Rite Aid is also assuming $850 million in debt in the deal.
"The stronger we get, the more choices we have in the future," Mary Sammons, Rite Aid's president and chief executive, said in an interview after a shareholder meeting at a downtown Harrisburg hotel to announce the vote tally.
For Rite Aid, the deal marks its first major acquisition since a turnaround team arrived to bring the company back from the brink of bankruptcy seven years ago.
The deal would create a company of about 5,180 stores in 31 states and Washington, D.C., with revenue of nearly $27 billion, stores on both coasts and major market shares in the New York City, Philadelphia, Pittsburgh and Baltimore areas.
Even with the acquisition, keeping up with CVS and Walgreen will not be easy.
Walgreen, with 5,584 stores and $47.4 billion in revenue in its last full fiscal year, opens a new store every 18 hours and has 500 new stores planned for this fiscal year.
CVS, with 6,200 stores and $37 billion in revenue in its last full fiscal year, purchased about 700 Sav-On and Osco drugstores in June.
The 11 Eckerd stores operating in a 50-mile radius of Augusta will be rebranded as Rite Aid stores as part of a $950 million plan to convert Eckerd and Brooks locations during the next five years.
Rival CVS operates 14 stores in the area, and Walgreen operates four.
The Federal Trade Commission is still reviewing the deal. Rite Aid has said it expects the transaction to close shortly after the company's fourth quarter, which will end March 3.