Fred’s, a small regional drugstore chain from Memphis, Tenn., has had a very good week.
It all started Tuesday, when Fred’s said it would pay $950 million to buy 865 stores that Rite Aid needed to sell in order to appease anti-trust regulators and close its $9.4 billion buyout deal with Walgreens Boots Alliance Inc.
The deal will more than double Fred’s current store count of 650. CEO Michael Bloom called it a “transformative event” for the company.
Fred’s stock has soared since, rising about 75 percent this week, its biggest one-week gain since its shares began trading nearly 25 years ago.
The company, founded in 1947, sells cosmetics, food and runs about 370 pharmacy departments within its stores.
Fred’s lost money in the past two fiscal years, and had been in the process of closing stores that weren’t performing well.
Its revenue last year was $2.2 billion, compared to Walgreens’ $117.4 billion and Rite Aid’s $30.7 billion.
Fred’s said buying the Rite Aid stores will turn it into a “national competitor,” possibly helping it expand outside of the Southeast. More than half of Fred’s stores are in Mississippi, Georgia, Tennessee or Alabama.
Rite Aid’s 4,600 stores are spread out around the country, but its biggest presence is along the coasts, in states such as California, New York and New Jersey. The companies won’t announce which stores Fred’s will buy until the deal between Walgreens and Rite Aid closes, which is expected to happen next year.