Rite Aid Completes Acquisition of 1,854 Brooks and Eckerd Stores

Rite Aid Completes Acquisition of 1,854 Brooks and Eckerd Stores

With More than 5,000 Stores, Rite Aid Becomes Largest East Coast Drugstore Chain and Strengthens Its Position as Third Largest U.S. Drugstore Chain

Company Sees Substantial Opportunities to Reduce Costs, Improve Operations and Grow Earnings

President and CEO Mary Sammons Also Appointed Chairman

Rite Aid Corporation (NYSE:RAD) announced today that it has completed its acquisition of 1,854 Brooks and Eckerd stores and six distribution centers from The Jean Coutu Group (PJC) Inc. (TSX:PJC.A), creating the largest drugstore chain on the East Coast and significantly strengthening its position as the third largest U.S. drugstore chain.

The stores and distribution centers are located in 18 states, primarily on the East Coast and in the Mid-Atlantic region. After regulatory required divestitures of 26 stores, Rite Aid will have 5,160 stores with the scale to compete more effectively with its major drugstore rivals.

Mary Sammons, Rite Aid president and CEO, has also been appointed chairman of the Rite Aid Board of Directors, succeeding Robert G. Miller who remains a Director. Michel Coutu, formerly president of The Jean Coutu Group’s U.S. operations, has been appointed Rite Aid non-executive co-chairman.

“The completion of this transaction is a significant milestone for the shareholders, customers and associates of Rite Aid, and we are ready to hit the ground running with a detailed integration plan that includes significant investments in the Brooks and Eckerd stores and in our new associates,” Sammons said. “With a much larger Rite Aid, we’re confident we will have substantial opportunities to reduce costs, improve operations and grow earnings per share, which will generate greater value for our shareholders.”

Integration Plan Designed for A Smooth Transition

Brooks Eckerd will be integrated into Rite Aid in phases, including replacing all store systems with Rite Aid state-of-the-art technology and a minor remodel of all the stores. Starting immediately, Rite Aid will fully convert 23 Brooks and Eckerd pilot stores, which represent various store layouts, and integrate the six new distribution centers. Once the pilot store conversion is completed, Rite Aid will begin replacing systems in all of the acquired stores, which is expected to be completed by next March. Some time after its systems are replaced, every acquired store will receive a minor remodel, including upgraded décor and remerchandising. All stores are expected to be converted and re-branded Rite Aid over the next 16 months.

“These are good stores in good locations with dedicated associates. We are eager to bring them into Rite Aid, and we’ve got the infrastructure, management team, best practices and plan to do it,” Sammons said. “To make sure we limit disruption to both customers and associates, ours is a systematic phased approach.”

Over the next several years, Rite Aid plans to fully remodel almost all of the Brooks and Eckerd stores, bringing the total investment to upgrade the stores and distribution centers to more than $1 billion. The company will also continue its store development program with plans to open nearly 1,000 new and relocated stores over the next five years.