Rite Aid Corporation and Albertsons Companies announced on Wednesday they are terminating their merger agreement, the evening ahead of a shareholder vote over the deal.
The announcement is a blow to the pharmacy and the grocer, which are both facing mightier competitors in their respective industries, but were unable to structure a deal that sufficiently appealed to investors.
The $24 billion deal, announced in February, has faced push-back from a number of retail investors as well as top ten shareholder Highfields Capital Management. Critics have argued the deal provides Albertsons’ private equity owner, Cerberus Capital Management, a vehicle to take the company public without rewarding Rite Aid shareholders in turn.
Adding to mounting challenges, influential investor advisory firms Glass Lewis and Institutional Shareholder Services in July urged investors to vote against the tie-up.
Albertsons, though, said Wednesday it was unwilling to renegotiate the terms of the deal
“After careful consideration of all information available to our board of directors through today, we were unwilling to change the terms of the merger,” it said in a statement.
Rite Aid CEO John Standley, meantime, said in a statement, “While we believed in the merits of the combination with Albertsons, we have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company.”
Rite Aid also said Wednesday that its board is “evaluating governance changes at the company.” The company added it will “continue to engage with stockholders” as it evaluates those changes. Neither Rite Aid nor Albertsons will pay a break-up fee.