Discount Retailer Fred's Strikes Deals to Sell More Pharmacy Assets

By Aisha Al-Muslim

Discount retailer Fred's Inc. has reached two separate deals to sell some of its pharmacy assets, including 10 drugstores and inventory, to Walgreens Boots Alliance Inc. and ExpressRx Co. for a total of about $16.4 million.

Walgreens is looking to buy pharmacy inventory from Fred's for about $9.4 million, according to a filing Thursday in the U.S. Bankruptcy Court in Wilmington, Del. ExpressRx has agreed to purchase 10 Fred's pharmacies for about $7 million.

As part of Walgreens' offer, the drugstore chain would acquire substantially all of Fred's pharmacy assets, including prescription files and records, as well as retail prescription and pharmaceutical inventory.

ExpressRx, meanwhile, intends to buy Fred's prescription files, records, inventory, other nonpharmaceutical inventory, furniture, fixtures and equipment, and other assets. ExpressRx plans to take over leases at four Fred's pharmacies.

Fred's is seeking court approval for private sales without putting the assets on the auction block. The company's lawyers say the possibility that an auction would attract a higher bidder is outweighed by the cost and delay of the process.

Earlier this month, Fred's filed for chapter 11 and said it would shut down all of its stores after trying unsuccessfully for more than a year to turn around the 72-year-old company.

Founded in 1947, the Memphis, Tenn.-based retailer's stores generally served low-, middle- and fixed-income families in small towns in the southeastern U.S. In an attempt to salvage the company, Fred's sold some of its assets, reduced expenses, improved its inventories and cut its debt levels.

Last year, Fred's sold prescription files and other assets at pharmacies in 179 of its stores to Walgreens for about $176.7 million.

Recently, Fred's sold 38 of its retail pharmacy stores to a subsidiary of CVS Health Corp. for $11.7 million in cash, plus $3.5 million for inventory.

A hearing on the proposed sales to Walgreens and ExpressRx is scheduled for Oct. 16 in front of Judge Christopher S. Sontchi in Wilmington, Del.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

September 26, 2019 19:31 ET (23:31 GMT)

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