US merchandise and pharmacy retailer Fred’s has announced reaching a definitive agreement to sell certain assets of EntrustRX, a speciality pharmacy unit of Fred’s, to a subsidiary of retail pharmacy and healthcare firm CVS Health.
EntrustRx dispenses speciality pharmaceuticals across 50 states to treat complex conditions and diseases that typically require ongoing support for extended periods of time
Its main therapy lines include hepatitis C, oncology, growth hormones, multiple sclerosis and rheumatology.
As part of the deal, the aggregate consideration to be paid by CVS is $40m, and an amount equal to the value of inventory of EntrustRX.
Fred’s interim CEO Joe Anto said: “One of Fred’s top priorities for 2018 has been to monetise non-core assets and we are pleased to have reached an agreement for the sale of EntrustRx.
“The cash proceeds will allow us to pay down a significant portion of our debt and also be used for general corporate purposes.”
The transaction, scheduled to close by the end of this month, is subject to certain customary closing conditions.
Covington Associates and Bass Berry & Sims offered advisory consultation to Fred’s on this transaction.
Fred’s acquired EntrustRx, along with its parent company Reeves-Sain Drug Store, for $66m in April 2015.
Headquartered in Coldwater, Mississippi, Fred’s currently operates approximately 600 general merchandise and pharmacy stores, including 12 franchised locations and three speciality pharmacy-only locations.
The drug store chain currently offers nationally recognised brands, own-label products and a range of value-priced selections.