Rite Aid’s accounting scandal receded further into the past on Thursday as shareholders approved a $3 billion acquisition of the Brooks and Eckerd drugstore chains from Jean Coutu Group.
The cash-and-stock deal, which includes more than 1,800 stores, would make Rite Aid the largest drugstore retailer in the East, according to the Associated Press. The company is the third-largest drugstore chain in the United States, behind Walgreen and CVS, the AP added.
The transaction is still subject to review by the Federal Trade Commission and under the Hart-Scott-Rodino Antitrust law. Rite Aid expects to complete the acquisition shortly after March 3, the end of its fourth quarter.
Jean Coutu would become Rite Aid’s largest shareholder, with 30.2 percent voting power, according to the AP.
The wire service observed that according to some skeptics, Rite Aid overpaid for drugstores that lag industry productivity benchmarks. In addition, its long-term debt will swell to about $5.8 billion.
The company plans to spend $950 million over five years to remerchandise the Brooks and Eckerd stores and convert them to Rite Aid’s systems, the AP also reported.
Rite Aid’s $1.6 billion accounting scandal was one of the largest of the 1990s. A number of top executives were convicted on criminal charges and imprisoned, including former chief executive officer Martin Grass, who was sentenced to 8 years; former chief financial officer Frank Bergonzi, who received 28 months; and former vice chairman and chief counsel Franklin Brown, who was sentenced to 10 years in prison when he was 76.