Rite Aid has rejected a non-binding off-market proposal from Spear Point Capital Management to acquire the company for $3.6 billion. Spear Point highlighted Rite Aid’s data as a major reason for the takeover offer, noting that it has “significant value that could exceed the equity value of the company,” but the retailer and its Board of Directors “concluded that the proposal was not credible and did not warrant further exploration.”
Rite Aid’s concerns included that the Spear Point proposal provided no evidence of financing, required multiple months of exclusivity and then called for Rite Aid to spend months soliciting competing offers. Additionally, the deal required that none of Rite Aid’s debt would become due and payable upon a change in control, which is against the terms of nearly all of the company’s debt instruments. Finally, Rite Aid noted that “Spear Point has no track record of acquiring public companies the size and complexity of Rite Aid.”
Spear Point and its data valuation and monetization partner, Silverback, plan to discuss its strategic vision for Rite Aid at an April 28 webinar. The companies invited Rite Aid’s shareholders, stakeholders and management to join the discussion as well, stating that “obviously, the only logical reason to not even explore our proposal would be that they have a superior plan to create even greater shareholder value. I would love to hear it, as I suspect shareholders would. The shareholders deserve more and we have a plan to give them that.”
In a statement, Rite Aid noted that it “remains focused on executing its growth strategy through continued leadership as a full-service pharmacy company, and will, as always, be responsive to credible proposals that will enhance stockholder value.”
Rite Aid’s rejection of the offer may have been fueled by relatively strong Q4 2021 results. While the retailer still posted a $389.1 million loss during the quarter, compared to a loss of $18.5 million in Q4 2020, revenue increased by 2.5%, driven by a 12% increase in pharmacy sales. Retail pharmacy same-store sales rose 8.7% during the period.