PRESCRIPTION: MERGER : THRIFTY PAYLESS BEING ACQUIRED BY DRUG STORE GIANT.Byline: Deborah Adamson Daily News Staff Writer Thrifty PayLess Thrifty PayLess Holdings, Inc. was a pharmacy holding company that owned the Thrifty Drugs and PayLess Drug Store chains in the western United States. The combined company was formed when Los Angeles-based TCH Corporation, the parent company of Inc., the West's largest drug store operator, is being bought by Rite Aid Rite Aid (NYSE: RAD) is a United States retailer and pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid Corporation is one of the nation's leading drugstore chains. Corp. in a $2.3 billion deal. Officials announced Monday that Wilsonville, Ore.-based Thrifty PayLess will merge into Eastern giant Rite Aid. The combined company is to be headquartered at Camp Hill, Pa., where Rite Aid is based. It will have 3,500 stores and $10 billion in annual revenue. In revenue, the new entity would be second by only a slim margin to Walgreen Co. Prior to the deal, Rite Aid had about half the revenue of Walgreen, though Walgreen had fewer stores even before the acquisition. ``This is a strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. that we're pursuing in order to position us into faster-growing areas of the country and also to gain leading market share,'' said Martin Grass, chairman and chief executive of Rite Aid. On the news, Thrifty PayLess stock closed up 3 to a record 21-3/8 on trading of 4.8 million shares, 32 times its three-month daily average. Rite Aid's shares fell 1-1/2 to 34-3/8. The merger is expected to close as early as January. Thrifty thrifty said of livestock that put on body weight or produce in other ways with a minimum of feed. The opposite of illthrift. has 32,000 workers and 1,007 stores in 10 Western states. The company operates 676 stores in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , with 439 Thrifty outlets in the Southland south·land or South·land n. A region in the south of a country or an area. south  land·er n.Noun 1. and 237 PayLess locations in Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern . Grass said no store closings are planned. Job loss will be limited mainly to the 740 Thrifty PayLess corporate employees in Oregon. The combined company, which will bear the Rite Aid name on all stores, plans to open 100 outlets along the West Coast and 100 in the East Coast in two years as part of its expansion plan. Grass said many Southland stores will be extensively remodeled. Some will add Rite Express, which offers one-hour photo, fax, overnight mailing, packaging and money orders. ``The trend is certainly toward consolidation, with fewer and larger players in the drug store industry,'' said N. Richard Nelson, a retail analyst at Nesbitt Burns in Chicago. He said that in recent years, drug store profit margins have been increasingly squeezed by competition and ``third party prescription payers'' such as health maintenance organizations. ``Throughout the pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. industry, managed-care third party payers, by delivering large volumes of prescriptions, demanded price concessions,'' said Frank Bergonzi, chief financial officer at Rite Aid. ``What 10 years ago (represented) the highest . . . profit margins is today the lowest.'' In the first year, the merger is expected to yield $65 million in savings. Under terms of the deal, Rite Aid will pay $1.4 billion in stock and take on $890 million in Thrifty Payless' debt. Thrifty PayLess shareholders will receive 0.65 shares of Rite Aid stock in exchange for one share. They will get 38.7 million Rite Aid shares, representing 31.2 percent of the combined company. Green Equity Investors L.P. and Kmart Corp., who together own 43 percent of Thrifty PayLess, will receive 7.6 percent and 6 percent, respectively, in the new entity. In 1992, Leonard Green and Partners in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. bought Thrifty from parent company Pacific Enterprises for $50 million plus the assumption of $260 million in debt. A year later, the investment group bought PayLess from Kmart Corp. for $1 billion in cash and other compensation and merged it with Thrifty. Green is a partner with Green Equity Investors.Six months ago, the Federal Trade Commission scuttled Rite Aid's plans to buy No. 2 Revco for $1.8 billion. CAPTION(S): Photo Photo: (Color) On Monday, Thrifty Payless officials announc ed a merger deal with Rite Aid. Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. |
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