(Reuters) - Rite Aid Corp said it would sell 865 stores to Fred’s Inc for $950 million to satisfy antitrust concerns over its proposed takeover by Walgreens Boots Alliance Inc.
Fred’s shares jumped 73 pct to $19.34 in morning trading on Tuesday, while Rite Aid shares were up 5.6 pct at $8.63.
Rite Aid and Walgreens were widely expected to divest stores in states where the combined company would have a particularly strong position.
Walgreens has 13,200 stores, nearly 60 percent of which are in the United States, while Rite Aid has 4,570 stores in the United States.
Walgreens said in October 2015 it would buy smaller peer Rite Aid for $9.4 billion to widen its U.S. footprint.
Fred’s will continue to operate the acquired stores under the Rite Aid banner during the transition period, the companies said on Tuesday.
Walgreens said it continues to expect the acquisition to realize savings of over $1 billion within three to four years after the closing of the deal, which is expected in early 2017.
Fred’s said BofA Merrill Lynch and Regions Bank will provide financing for store acquisitions.
Fred’s was advised by A.T. Kearney. BofA Merrill Lynch was the financial adviser for Walgreens Boots Alliance, while Citi advised Rite Aid.
Reporting by Gayathree Ganesan and Komal Khettry in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty