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Reports: Albertsons calls off Price Chopper deal

BY Brian Berk

NEW YORK — Albertsons decided to drop its bid to buy Golub, parent company of Schenectady, N.Y’s, Price Chopper chain, according to several news reports.

Neither company confirmed merger talks, but Drug Store News reported on Nov. 30 the two companies could be nearing a $1 billion deal.

Golub currently operates 136 Price Chopper and Market 32 stores in New York, Vermont, Connecticut, Pennsylvania, Massachusetts and New Hampshire. It launched as a supermarket chain in 1932 after Russian immigrant Lewis Golub opened a wholesale grocery warehouse in 1922. 

Albertsons completed its $9.2 billion merger with Safeway two years prior to these merger discussions.

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Study: Retailers grow omnichannel in response to consumer demand

BY Deena M. Amato-McCoy
The omnichannel evolution has begun — and more retailers are adopting the business strategy to better meet shoppers’ needs.
 
That’s according to “Retail Insight: Moving Beyond Omnichannel,” a report from SPS Commerce and conducted by Retail Systems Research. The study, which is based on responses from more than 500 retailers, suppliers and logistics firms worldwide, said that more than 35% of retailers are on track with their omnichannel execution, up nearly 200% year-over-year.
 
Delving deeper into the actions of retail winners (defined as companies growing 4.5% or more annually), this group continues to advance their lead in omnichannel “by forging closer collaboration with their trading community to deliver the speed and consistency across channels that consumers want and expect,” said Nikki Baird, managing partner at Retail Systems Research.
 
Consumers are definitely calling the shots in this increasingly omnichannel market. In fact, more than 75% of respondents cited consumer demands as the top factor shaping their business over the next five years. 
 
“Shopper demands for a personalized and seamless experience across all channels are outpacing the retail industry’s ability to keep pace,” said Peter Zaballos, senior VP and chief marketing officer at SPS Commerce. “The findings from this year’s industry benchmark report demonstrate the urgency of streamlining order fulfillment, the importance of real-time inventory visibility and the critical role accurate item information plays in delivering an engaging consumer shopping experience.”
 
Of course, there are still challenges to overcome. For example, order fulfillment execution continues to be difficult due to dramatically increasing order volume and complexity. Specifically, legacy systems are the top factor hindering omnichannel execution among 29% of companies, data revealed.
 
It is a factor that needs to be solved with 53% of respondents expecting increased online orders; 43% expecting increased item attribute sets; 55% expecting assortment expansion, and 40% planning to increase drop ship vendors, the study said.
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Friday is the Walgreens-Rite Aid merger deadline

BY Michael Johnsen

DEERFIELD, Ill.  — The day some analysts thought would never come has arrived. On Friday, Jan. 27, the deadline expires for the pending acquisition of Rite Aid by Walgreens Boots Alliance for $9 per share in cash (representing a $17.2 billion deal including the acquired net debt).

What now?

The deal is not likely to be approved by the Federal Trade Commission on Friday. The agency declined to comment in an email to DSN Thursday afternoon, but analysts reporting on the deal generally feel that the agency will not act that quickly. David Balto, a former FTC official, shared with Reuters on Thursday that the agency could take as much as two months to assess the proposed 865 store divestiture from Walgreens to Fred's. "Retail market divestitures are very complex. It's unrealistic to assume that they could get through a divestiture that's this significant in a few weeks," Balto told Reuters, referencing the Dec. 20, 2016, announcement.

Rest assured, Walgreens Boots Alliance and Rite Aid were actively discussing next steps as late as Thursday, according to Walgreens Boots Alliance CEO Stefano Pessina. "These discussions include taking into account anything that is required to gain approval of the transaction," he told Walgreens shareholders during the company's annual meeting in New York Thursday morning.

Specifically regarding the FTC, Pessina offered no comment, however. "The FTC is doing their job and the process is going on and we cannot comment on what the FTC is doing," he said. "The only thing  I can repeat is we are actively engaged to dialogue with the FTC."

What happens if the deal falls through? "Walgreens would be required to pay a $325 million break up fee if the FTC blocks the transaction," noted Ricky Goldwasser, Morgan Stanley equity analyst in a research note published last week. "Additionally, Walgreens would not see the benefit of Rite Aid's national footprint, an incremental benefit (if deal closes) to value proposition for PBMs, especially as pharmacy networks continue to narrow," she wrote. In the note, Goldwasser predicted Walgreens Boots Alliance and Rite Aid would extend the deadline.

What happens if the deal doesn't fall through? If Walgreens and Rite Aid on Friday decide to extend the deadline for the deal a second time, the decision falls back to the FTC. President Donald Trump on Wednesday designated Maureen Ohlhausen as acting chairman of the Federal Trade Commission by a White House order. Ohlhausen will replace former FTC chairman, Edith Ramirez, who recently announced her resignation effective Feb. 10, 2017.

The FTC includes a total of five commissioners appointed by the president and confirmed by the U.S. Senate when operating at full capacity. Currently, however, once Ramirez departs the FTC, it will be down to two commissioners:  acting chairman Ohlhausen, a Republican who started her term in April 2012, and Terrell McSweeny, a democrat who started in April 2014.  The new composition will give President Trump the opportunity to select up to three more commissioners, however no more than three commissioners total can be of the same political party.

While many hold to the belief that a Federal Trade Commission operating under a Republican administration will be "big-business" friendly and therefore more likely to approve the deal, Wolfe Research analyst Scott Mushkin, last week shared with DSN that that might not be the case.

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