On Wednesday, February 11, 2015 Rite Aid agreed to the purchase of top pharmacy benefit manager, Envision Pharmaceutical Services for roughly $2 Billion in cash and stock. Below are some reactions to the transaction:
- The market has reacted favorably to Rite Aid's purchase. The company's stock is up about 10% today (above $8). This is a far cry from when Rite Aid's stock was trading at $.22 per share.
- It is amazing that Rite Aid made such a large acquisition primarily from cash.
- The acquisition is predicted to add about $5 billion dollars to Rite Aid's sales. The transactions is a strong add to top line growth and accretive to Rite Aid this year.
- Rite Aid (Rated B2 by Moody's) is just catching up with CVS and Walgreens that have previously acquired benefits managers but it is a welcome addition.
- With regard to net lease investment sales, Rite Aid cap rates have dramatically compressed in the last two years and Rite Aid properties with longer term leases are now being offered in the low 6's.
- On the negative side, Rite Aid is still developing a small number of new stores per year so there aren't very many Rite Aids on the market.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
