Fred’s Inc. said it has hired investment bankers to examine the value of its ‘retail pharmacy script portfolio’ for potential buyers.
The announcement Thursday by the retailer to hire PJ Solomon comes as Fred’s attempts its latest financial turnaround while reporting first quarter profits fell to $111.6 million compared to $128.6 million last year on weaker sales.
There’s been some speculation CVS Health, Walgreens Boots Alliance and the company that will be created once Rite Aid and Albertsons complete their merger could be interested in some of Fred’s properties. Fred’s has already sold its specialty pharmacy business to CVS for $40 million.
“We have engaged PJ Solomon & Company to analyze the value of our retail pharmacy script portfolio and also engage with potential strategic buyers on this part of our business,” Fred’s Interim CEO Joe Anto said. “That process is well underway and we will provide updates as appropriate.”
PJ Solomon’s investment banking services include mergers, acquisitions, divestitures and restructurings, the firm’s web site said.
Anto replaced Michael Bloom, who resigned in April as CEO to “pursue other interests.” Shortly after Bloom became CEO in late August of 2016, he began to shed the company’s past as “Fred’s Super Dollar” to focus on the faster-growing industry of personal healthcare, hiring new executives and investing heavily in both retail pharmacy and specialty pharmacy.
But Fred’s was unable to escalate its shift to healthcare when a deal to buy hundreds of Rite Aid stores ended abruptly last year. An attempt by Walgreens Boots Alliance to buy Rite Aid and satisfy the Federal Trade Commission by selling 865 Rite Aid stores to Fred’s was unable to pass regulatory muster. Walgreens instead bought just 2,186 of the more than 4,500 Rite Aids, turning Rite Aid into a multi-regional drugstore chain and preventing Fred’s from buying hundreds of drugstores all at once.