Fred's Remains 'Optimistic' On Rite Aid Deal Amid FTC Review
Forbes
Bruce Japsen
Forbes June 6, 2017 @ 08:57 AM
Fred’s Inc. is “working collaboratively with Walgreens, Rite Aid and the FTC to obtain approval for acquisition of Rite Aid stores.”Fred’s Inc. Tuesday said it remains “optimistic” it will be able to buy up to 1,200 Rite Aid stores as it works with Walgreens Boots Alliance and Rite Aid to win regulatory approval of its merger.
Fred’s comments came as the Federal Trade Commission reviews whether to approve the deal, which would cement Walgreens as the nation’s largest drugstore chain.Though there have been reports that the FTC has concerns about Fred’s ability to buy the Rite Aid stores, the pharmacy chain’s management Tuesday said it is working “collaboratively with Walgreens, Rite Aid and the FTC to obtain approval for acquisition of Rite Aid stores.” If the FTC clears the transaction, Fred’s would become the third-largest pharmacy chain after Walgreens and CVS Health, respectively.
"Looking ahead, we are focused on executing our key objectives for 2017, including diversifying and optimizing our assets to improve performance and cash flow,” Fred’s CEO Michael Bloom said in announcing the company’s first quarter fiscal 2017 earnings. “In large part we are on track with the Fred’s 2017 plan, and doing exactly what we said we would do to optimize Fred’s Pharmacy’s business model and enhance value for our shareholders.”Fred’s reported a net loss in the quarter of $36.5 million, or 98 cents a share, thanks in part to various charges totaling $45 million, or 92 cents a share. The charges included legal and related advisory fees related to the acquisition of Rite Aid stores. Sales were down 3% to $532.3 million in the first quarter.
Bloom and Fred’s management gave no indication the FTC had concerns about the deal , but didn’t offer any detail of the discussions with the antitrust agency either. Walgreens last month officially set in motion a clock designed to force the FTC to make a decision on its purchase by early July.
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