Rite Aid (NYSE:RAD) stock was falling hard on Thursday following news that it is no longer planning to merge with grocery chain Albertsons.
Rite Aid notes that the reason it is no longer moving forward with the merger is due to the views of its shareholders. The company was planning to hold a special shareholder meeting today to vote on the merger. However, this is no longer taking place.
Rite Aid also points out that the agreement between it and Albertsons doesn’t require a payment from either company for the cancellation of the merger agreement. It also says that its Board of Directors is considering changes for its leadership. It plans to keep investors up to date on these efforts to keep in line with their views.
“We will continue building momentum for key areas of our business like our innovative Wellness store format, highly successful customer loyalty program and expanded pharmacy service offerings, as we also enhance our omni-channel and own brand offerings to strengthen our competitive position and create long-term value for stockholders,” Rite Aid Chairman and CEO John Standley said in a statement.
The decision to pull out of the merger with Albertsons could be bad news for Rite Aid. The company was hoping to use the deal to expand its store presence. Without this deal, it doesn’t have the resources to do that. This leaves it in poor shape to take on larger rivals, such as CVS Health (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ:WBA).
RAD stock was down 10% as of Thursday morning and is down 18% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.