Research Update: Albertsons Companies Inc. Ratings Affirmed After Rite Aid Corp. Merger Called Off; Outlook Stable

Albertsons Cos. Inc. (ACI) is no longer acquiring Rite Aid Corp. (RAD) in a $24 billion transaction. The companies jointly announced that they terminated their merger agreement based on insufficient RAD shareholder support for the merger. We are affirming our 'B' issuer credit rating on ACI and stable outlook. While ACI will not benefit from RAD's expanded, more diverse customer base, debt levels are unchanged and we continue to view its competitive position as the third-largest U.S. grocer as sufficient to navigate the heightened competition afflicting the U.S. grocery industry. We also saw limited operational upside or synergies from the Rite Aid acquisition. We are withdrawing our ratings on the revolver, term loans, and secured notes associated with the RAD

...+ Albertsons Cos. Inc. (ACI) is no longer acquiring Rite Aid Corp. (RAD) in a $24 billion transaction. The companies jointly announced that they terminated their merger agreement based on insufficient RAD shareholder support for the merger. + We are affirming our 'B' issuer credit rating on ACI and stable outlook. While ACI will not benefit from RAD's expanded, more diverse customer base, debt levels are unchanged and we continue to view its competitive position as the third-largest U.S. grocer as sufficient to navigate the heightened competition afflicting the U.S. grocery industry. We also saw limited operational upside or synergies from the Rite Aid acquisition. + We are withdrawing our ratings on the revolver, term loans, and secured notes associated with the RAD transaction, in light of the termination or redemption of such debt. We are affirming our issue-level ratings on the remaining ACI debt. + We currently view ACI's leverage as modestly elevated for the rating. However, the stable...

Research Update