Fred’s stock was soaring Monday on news of a new deal with Walgreens (NASDQ:WBA).
The deal between Fred’s (NASDAQ:FRED) and Walgreens will have the latter buying up the patient information and pharmacy inventory from 185 locations owned by the former. These locations will still operate as stores, but will no longer contain pharmacies.
Walgreens will be paying a total of $165 million for the patient information of Fred’s customers. It will also be paying an additional amount as part of the deal for the company’s pharmacy inventory.
This is good news for Fred’s stock as the company has been looking for ways to wipe out its debt. It had previously announced that it planned to do so by selling of non-core assets of its company.
Fred’s intention to sell off the patient information and pharmacy stock of 185 stores will have it greatly reducing the number of pharmacies that it operates. Once the deal is complete, the company will only have a total of 162 locations that still operate pharmacies.
Fred’s and Walgreens will be sending out letters to customers to alert them of the change in pharmacies. WBA will also be allowing Fred’s pharmacy employees to apply for open positions at its own pharmacies.
According to Fred’s and Walgreens, they are expecting to start transferring customer information during the fourth quarter of 2018. The two companies say they expect to complete the information transfer before the start of the first quarter of 2019.
FRED stock was up 62% and WBA stock was up 1% as of Monday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.