CAMP HILL, Pa.--(BUSINESS WIRE)--Rite Aid Corporation (NYSE: RAD) today announced that it has issued a letter to shareholders in connection with its proposed merger with Albertsons Companies Inc. The letter details the merits of the proposed merger with Albertsons and highlights the Company’s recommendation that shareholders vote FORthe transaction.

The full letter to shareholders is available at https://bit.ly/2J6apEY and the text is included below.

SUPPORT RITE AID’S TRANSFORMATION FOR THE FUTURE BY VOTING FOR THE MERGER WITH ALBERTSONS COMPANIES

Dear Fellow Rite Aid Shareholder:

Rite Aid will hold a Special Meeting of Stockholders on August 9, 2018 to vote on the proposed merger with Albertsons Companies (“Albertsons”). We ask for your support by voting your shares FOR the merger to accelerate Rite Aid’s strategic and financial transformation and to realize the significant value we anticipate through ownership in a stronger, better-positioned company.

As the retail healthcare landscape continues to evolve, we have taken critical steps to improve Rite Aid’s competitive position through our innovative Wellness store format, enhanced customer loyalty program and expanded health and wellness offerings. We have also had robust discussions over the past several years, including with an extensive list of third parties, around a range of strategic options and considered Rite Aid’s strategic position as an independent enterprise. Our work has led us to conclude that the merger with Albertsons is the best way to achieve our key strategic priorities of growing front-end sales, serving as a trusted advisor to our pharmacy customers, building a winning value proposition for payors and providers, and delivering compelling long-term value to our shareholders.

Based on the growth and value creation opportunities presented by the proposed combination with Albertsons, we are confident that the merger represents the right combination, with the right partner, at the right time.

For additional information about the proposed merger and how to vote your shares, please visit www.riteaid-albertsons.com.

Enhancing Rite Aid’s Ability to Compete in Today’s Evolving Marketplace

As the ongoing consolidation across our industry continues, it’s clear that our business environment is changing faster than ever before. These changes further emphasize the importance of completing our proposed merger with Albertsons in order to accelerate the pace of our transformation. As a top-five food and drug retailer following the merger, Rite Aid will benefit from improved scale, a more diversified business and a stronger market position. Together, our unique pharmacy and grocery combination will allow us to better leverage important assets such as our EnvisionRxOptions integrated pharmacy benefit manager, RediClinic convenient care offering and Health Dialog population health management solution across a broader customer base to deliver a compelling value proposition for payors and providers and improved relationships with customers. In addition, our increased local market scale, greater density in key existing markets, including #1 or #2 positions in 66% of combined metropolitan markets, and enhanced omni-channel capabilities will enable us to meet our customers’ needs where, when and how they want to shop.

A graphical representation of the pro forma combined company’s local presence in attractive markets is available here: https://bit.ly/2J7Uk1x

Financial Transformation

In addition to accelerating our strategic transformation, the merger is expected to transform Rite Aid’s pro forma financial profile in terms of scale, growth, profitability and financial strength.

Greater Scale and Profitability	Reduced Leverage and Increased Cash Flow	Compelling Synergies	Attractive Growth Targets (3-year CAGR)
~4x expected increase in revenues from ~$22 billion to ~$83 billion(1)	Anticipated combined company leverage, including synergies, of 3.9x – lower than 4.8x(2) current standalone Rite Aid leverage	$375M identified run-rate cost synergies expected by February 2022(3)	3.5%-4.5%expected revenue growth
~6x expected increase in Adjusted EBITDA from ~$645 million to ~$3.7 billion with higher margins(1)	$1.9B FY18E combined free cash flow(4)from multiple revenue sources: Grocery (72%), Pharmacy (13%), Front End (8%) and PBM (8%)	$3.6B expected incremental revenue opportunities(3)	11%-15%expected Adjusted EBITDA growth

Your Vote Is ImportantNo matter how many shares you own, please sign and return the enclosed proxy card and vote FOR the proposal to approve this highly compelling combination with Albertsons. Your vote is important, as a failure to vote will have the same effect as a vote AGAINST the merger proposal. In order to pass, the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Rite Aid common stock.

Vote Online	Vote by Phone	Vote by Mail
1. Look for the web address on your proxy card or voting instruction form2. Locate the Control Number on your proxy card or voting instruction form3. Access the web address of the voting site 4. Enter your Control Number and follow the instructions to vote	1. Locate the Control Number on your proxy card or voting instruction form2. Dial the phone number provided on the proxy card or voting instruction form3. Follow the instructions to enter your Control Number and your vote	1. Sign and date your proxy card or voting instruction form2. Return your proxy card or voting instruction form in the postage-paid envelope provided

Please vote using your proxy card today, either online, by phone or by mail. For questions about how to vote your shares, please contact Morrow Sodali, our proxy solicitor at (800) 662-5200 or RAD.info@morrowsodali.com.

Thank you for your continued support and investment in Rite Aid.

Sincerely,

John Standley
Chairman and Chief Executive Officer, Rite Aid Corporation

Michael Regan
Lead Independent Director, Rite Aid Corporation

(1)	On April 12, 2018, Rite Aid provided guidance for its FY ending February 2019. For further information about this guidance, including a reconciliation of the Adjusted EBITDA range to the net income (loss) range, see the Appendix to this letter or Rite Aid's Form 8-K dated April 12, 2018. On April 11, 2018, Albertsons provided a financial outlook for FY ending February 2019. For further information, including a reconciliation of Adjusted EBITDA to operating income, see the Appendix to this letter or Albertsons’ Form 8-K dated April 11, 2018. Adjusted EBITDA includes full expected run-rate cost synergies of $375 million.
(2)	Pro forma net debt as of June 2, 2018 excludes refinancing, transaction costs and $200mm potential cash consideration from cash election.
(3)	The company estimates there are associated one-time costs of $400mm related to achieving the cost synergies and $300mm for achieving the incremental revenue opportunities.
(4)	Defined as Adjusted EBITDA – Capex (excluding synergies). Expected amount based on fiscal year ending February 2019.

About Rite Aid Corporation

Rite Aid Corporation (NYSE: RAD) is one of the nation's leading drugstore chains with fiscal 2018 annual revenues of $21.5 billion. The company also owns EnvisionRxOptions, a multi-faceted healthcare and pharmacy benefit management (PBM) company supporting a membership base of more than 22 million members; RediClinic, a convenient care clinic operator with locations in Delaware, New Jersey, Pennsylvania, Texas and Washington; and Health Dialog, a leading provider of population health management solutions including analytics, a multi-channel coaching platform and shared decision-making tools. Information about Rite Aid, including corporate background and press releases, is available through the company's website at www.riteaid.com.