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Albertsons-Rite Aid merger seen as win for Central Pa.

The following article was written by Jason Scott at the Central Penn Business Journal. Find the article here.

The proposed merger between Cumberland County-based Rite Aid Corp. and Idaho-based grocery operator Albertsons so far has been seen by local officials as a positive for Central Pennsylvania.

As such, it stands in contrast to the deal pushed in 2015 by Walgreens Boots Alliance to buy Rite Aid outright, which could have significantly reduced Rite Aid operations in the midstate. That deal came apart amid regulatory scrutiny.

The deal with Albertsons calls for maintaining Rite Aid’s corporate offices in East Pennsboro Township as a second headquarters for the new company. Its other office will be in Idaho.

“The idea of Rite Aid staying in the township is great news to hear,” said John Kuntzelman, president of the township’s board of commissioners. “Losing a company of that size would have a big impact on us.”

Rite Aid CEO John Standley will serve as CEO of the new company, which adds some Central Pa. clout, while Albertsons CEO Bob Miller will serve as chairman. Miller was Rite Aid’s CEO and chairman from 1999 until 2006, when he took the job at Albertsons.

“It seems like a match made in heaven,” said Dave Black, president and CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corp. “It’s a nice merger of companies whose footprints don’t overlap all that much.”

Black and other local officials said the deal makes sense for Albertsons as grocery stores adjust to Amazon’s impact on their business and the online retailer’s recent purchase of Whole Foods.

The drugstore model also is evolving with the biggest chains pursuing deals to combat the rise of online shopping.

CVS is buying health insurer Aetna, while Walgreens is buying more than 1,900 stores from Rite Aid in a separate deal. Walgreens also is in talks to buy AmerisourceBergen Corp., a drug distributor, according to reports.

The combination of Rite Aid staying in East Pennsboro and the redevelopment of the former Senate Plaza near Rite Aid’s headquarters could help spark new real estate investments in that area, local officials said.

“A lot is happening in that area with redevelopment,” said Jonathan Bowser, CEO of the Cumberland Area Economic Development Corp. “The whole West Shore is seeing development happening. It’s contagious and this (deal) helps bolster the attractiveness of the region.”

The merger could also lead to new stores in the region for Albertsons.

“Being in the grocery business, this may not be the best news for Giant,” Bowser said, referring to Giant Food Stores, one of the homegrown supermarket chains that dominate the grocery business in Central Pennsylvania.

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