Rite Aid rejected $800M takeover bid this month

Rite Aid earlier this month quietly rejected a takeover bid that valued the drugstore chain at more than $800 million — despite it being nearly twice the drugstore chain’s current stock price, The Post has learned.

Private-equity firm Spear Point Capital Management said it made an offer to buy Rite Aid on March 30 for $14.60 a share, or $815 million — a 56% premium to its closing price that day of $9.36, Spear Point co-founder Ron Bienvenu told The Post in an exclusive interview.

Shares of Rite Aid, the nation’s fourth-largest pharmacy chain, on Wednesday afternoon were recently trading at $7.70, up 4%.

Rite Aid General Counsel Paul Gilbert engaged in talks with Spear Point and rejected the offer, which was conditioned on due diligence of Rite Aid’s financials. In an April 11 letter, Gilbert said Spear Point doesn’t adequately understand the hurdles to buying the company that are posed by the company’s roughly $3 billion in distressed loans, according to Bienvenu.

Spear Point now is considering launching a hostile tender offer directly to shareholders, he said. Spear Point contends if it needs to pay the debt it can negotiate with Rite Aid creditors, and believes that with some loans trading at 75 cents to the dollar they might welcome a new strategy, he added.

“This isn’t over. This is the beginning,” Beinvenu told The Post. “There is real value here.” 

Rite Aid didn’t immediately respond to requests for comment.

Spear Point now is considering launching a hostile tender offer directly to shareholders.
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Rite Aid has principal payments coming due in late 2025 it might have trouble repaying, sources and analysts said. A buyout would likely be considered a change of control event requiring Spear Point to pay off the lenders.  

Spear Point, meanwhile, maintains it has a buyer for Rite Aid’s pharmacy benefits manager, Elixir, which covers 3.2 million lives. The undisclosed buyer is willing to pay $2 billion for the PBM business, which the Fitch Rating Agency recently said it believed was worth $1.2 billion, according to Bienvenu.

Spear Point also believes Rite Aid could be making much more by selling its data to other business — including selling its prescription data to insurers — for more than $1 billion. Presently, Rite Aid only shares data with its suppliers to manage inventory, Bienvenu said.

The fund also believes Rite Aid can sell data on its roughly 2,500 stores to real estate developers who seek information on economics and demographics in different parts of the country, he said.

Spear Point has recently become focused on what it calls the “assetization and monetization” of data and has several target companies in mind like Rite Aid, according to Bienvenu.

Spear Point has chosen not to approach lenders until its offer is made public early Thursday, he said.

Rite Aid, meanwhile, has been in steady decline for several years. In 2018, Walgreen’s bought 1,932 Rite Aid stores for $4.37 billion, cutting Rite Aid’s footprint by almost half.

Rite Aid’s shares since June 7 have slid from $22.29 to its current $7 level.

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