US-based grocery retailer Albertsons has entered a definitive agreement to merge its business with drugstore chain Rite Aid.
The transaction is reported to have been unanimously approved by the boards of directors of both companies.
Both companies expect to close the deal by the second half of this year, after obtaining regulatory approvals and fulfilling customary closing conditions.
Upon completion, the majority of Albertsons pharmacies will be rebranded as Rite Aid, and the company will continue to operate Rite Aid stand-alone pharmacies.
The combined business is expected to deliver annual run-rate cost synergies of $375m over the next three years and also access annual revenue opportunities of $3.6bn.
Albertsons chairman and chief executive officer Bob Miller said: “The hallmark of Albertsons Companies’ business has been to become the favourite local supermarket of our customers.
“We have always put our customers first, and our combination with Rite Aid will enable us to even better serve the valuable pharmacy customer by providing a fully integrated one-stop-shop for our customers’ food, health, and wellness needs.”
The combined business will include officials from both the companies and will have two headquarters, which will be located in Boise, Idaho; and Camp Hill, Pennsylvania.
Albertsons and Rite Aid intend to announce the name of their newly formed business after completion of the merger deal.
With the merger, customers will have the convenience to access to a full range of food, health, and wellness products offered by the two firms.
The integrated company will operate nearly 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington DC, US.
Rite Aid chairman and chief executive officer John Standley said: “This powerful combination enables us to become a truly differentiated leader in delivering value, choice, and flexibility to meet customers’ evolving food, health, and wellness needs.
“The combined platform positions Rite Aid to capitalise on our pharmacy expertise and expand and enhance our pharmacy footprint. We are confident that delivering improved customer experiences and value will drive growth and profitability while creating compelling long-term value for shareholders.”