ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, October 15, 1996 TAG: 9610150110
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: CAMP HILL, PA.
SOURCE: BLOOMBERG BUSINESS NEWS
Rite Aid Corp. said Monday it will buy Thrifty PayLess Holdings Inc. for $2.3 billion in stock and assumed debt, giving Rite Aid the biggest drugstore chain on the West Coast.
Rite Aid, the nation's largest drugstore chain, will pay $1.4 billion in stock and take on $890 million in Thrifty's debt as it makes a comeback from its scuttled bid in April to pay $1.8 billion for No. 2 Revco D.S. Inc.
Rite Aid in August announced plans to open 10 stores in the Roanoke and Lynchburg markets. Those stores would open over the next two years, the company said.
Monday's purchase would add the West Coast to Rite Aid's strongholds in the Midwest and East. That could help Rite Aid pick up more business from managed health care companies, which prefer to work with a region's dominant chains.
``In this industry, bigger is better,'' said Jack Russo, an analyst with A.G. Edwards & Sons. ``You can throw your weight around.''
Shares in Wilsonville, Ore.-based Thrifty PayLess closed up $3 to a record $21.37 1/2 on trading of 4.8 million shares, 32 times its three-month daily average. Rite Aid's shares fell $1.50 to $34.37 1/2.
Camp Hill, Pennsylvania-based Rite Aid will exchange 0.65 share for each Thrifty share.
Rite Aid said it will take a charge of about $125 million to cover cost of the deal. Most of the 740 Thrifty PayLess workers at the company's headquarters, which Rite Aid will close, will be fired.
Rite Aid has purchased four drugstore chains since the beginning of 1995, not including the failed effort at Revco.
``The number of attractive candidates is dwindling,'' said Rite Aid Chief Executive Martin Grass.
Rite Aid said it will sell 200 drugstores in North Carolina and South Carolina to Thrift Drug Inc., a unit of J.C. Penney Co. Rite Aid will also sell or close 100 stores in Alabama, Georgia and Florida.
``We just didn't have enough stores to be a significant player,'' Grass said.
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