In August 2006, Rite Aid announced an agreement to acquire all 1,859 Brooks and Eckerd pharmacies operated by the Jean Coutu Group, USA. The CtW Investment Group believed Rite Aid was paying too much, assuming too much financial and operating risk, and had not adequately protected shareholders in the event that Rite Aid's share price appreciated prior to closing and/or antitrust authorities required large-scale store divestitures.
In light of these concerns, the CtW Investment Group urged Rite Aid shareholders to vote against the acquisition. While proxy advisory firms split on the deal, shareholders approved it at a special shareholders meeting on January 18, 2007.
Rite Aid will now be challenged to create long-term value by successfully integrating the new stores and reducing debt. The CtW Investment Group expects the company's independent directors to monitor management's progress and report back to shareholders regularly.