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Rite Aid seals $3-billion deal to buy Brooks-Eckerd chain

01:00 AM EDT on Tuesday, June 5, 2007

By Paul Grimaldi

Journal Staff Writer

Rite Aid Corp. said yesterday it has closed on its $3-billion deal for Rhode Island’s Brooks-Eckerd drugstore chain.

The closing comes three months later than the company first expected.

The Jean Coutu Group, of Longueuil, Quebec, last August agreed to sell its Warwick-based Brooks-Eckerd unit to Rite Aid, which also agreed to assume $850 million in debt.

Rite Aid, of Camp Hill, Pa., expected the deal to close by March 3. However, it agreed with the federal and state regulators to close 26 stores to satisfy antitrust concerns.

With the deal complete, Rite Aid adds more than 1,850 Brooks and Eckerd stores and six distribution centers to its operations, bringing its store total to 5,160 in 31 states and Washington, D.C.

The company is adding two new divisions to the four it has to run the Brooks and Eckerd stores.

Rite Aid will fold the Brooks-Eckerd operations into its own in phases, first converting 23 Brooks-Eckerd pilot stores to test layouts and systems. The company will complete remodeling work at the remaining stores over the next 16 months.

Rite Aid has said it will close up to 200 stores in markets where it is oversaturated.

The company is unlikely to close stores in Rhode Island, where Brooks has 47 locations. Rite Aid was once Rhode Island’s third-largest drugstore chain but pulled out of the state in the mid-1990s.

But Rite Aid is moving store-support jobs out of Rhode Island over the next year or so.

Before the sale, Brooks-Eckerd employed about 600 people, in all, at its headquarters off Jefferson Boulevard in Warwick and space it leased nearby on Post Road. It employed others at its stores in the state.

Rite Aid is trying to sell the unoccupied 265,000-square-foot building in East Greenwich that Brooks-Eckerd built for its headquarters.

About 100 Brooks-Eckerd employees will take jobs in Camp Hill. Others are being offered jobs in regional offices that Rite Aid is opening along the East Coast to manage operations at its newly acquired stores.

District-level jobs in store management, pharmacy management, loss prevention and human resources — and the jobs that support those positions — will shift elsewhere by the end of next March.

The acquisition made The Jean Coutu Group the largest Rite Aid shareholder, with approximately 32 percent of its common stock. Those holdings propelled Michel Coutu, formerly president of Jean Coutu’s U.S. operations, to the position of Rite Aid’s non-executive co-chairman.

Mary Sammons, Rite Aid president and chief executive officer, has been appointed chairman, succeeding Robert G. Miller, who remains a director.

Shares of Rite Aid yesterday closed at $6.55, up 19 cents on the day.

pgrimald@projo.com

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