FINANCE

Update on Walgreens-Rite Aid merger

BY Michael Johnsen

There's been another development in the planned Walgreens Boot Alliance and Rite Aid merger.

Even as media reports circulated Friday that the Federal Trade Commission was preparing to block the merger between Walgreens Boots Alliance and Rite Aid, one of the merger’s key players took steps to help strengthen the case to approve it. According to a Securities and Exchange Commission filing, Fred's Pharmacy secured additional financing Friday to meet its obligation of acquiring as many as 1,200 Rite Aid stores that are expected to be divested as part of the merger.

The company entered into a second amended and restated commitment letter with its lenders that increases the committed financing by $450 million, from $1.2 billion to $1.65 billion; extends the initial outside commitment date to July 31, 2017; and permits Fred's to further extend the outside commitment date to Oct. 31, 2017.

Another amended and restated commitment letter increases financing by $100 million, from $450 million to $550 million with similar extensions.

"Financing made available under the Second Amended and Restated ABL Commitment Letter and the Amended and Restated Term Loan Commitment Letter will be used to fund the company’s proposed acquisition from Rite Aid of assets, including up to 1,200 retail stores, certain intellectual property, corporate infrastructure and distribution centers," Fred's CFO and executive VP Rick Hans said.

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C-SUITE

Mills Fleet Farm names new CEO

BY Marianne Wilson

Mills Fleet Farm has ended its hunt for a CEO.

The Midwest retailer announced the appointment of Derick Prelle as president and CEO succeeding Wayne Sales, who has been serving as interim chief since January 2017. Sales was given the position following the departure of Duncan MacNaugton, who left to become president and COO of Family Dollar.

Prelle joins Mills Fleet Farm from KKR Capstone, which acquired the formerly family-owned Mills Fleet in January 2016. As managing partner – Americas, Prelle ran KKR’s retail and consumer operations group over the past decade. He has worked closely with Mills Fleet in his role working with KKR’s portfolio companies.

Prelle also has significant experience working in the retail sector from his role as an associate partner in McKinsey & Company’s retail and consumer practice. In these two capacities, he has led significant transformation efforts at companies, including Dollar General and National Vision.

“Every day since I first started working with Mills Fleet Farm over a year ago, I’ve found myself continuing to be more and more excited to be a part of the Mills Fleet Farm story – one of an authentic brand, an incredibly differentiated concept, an exceptional leadership team and customer loyalty that spans generations,” said Prelle.

Effective today, Sales will return to Mills Fleet Farm’s board and serve as a special advisor to the company’s management team.

Founded in 1955, Mills Fleet is a value-based retailer of lifestyle merchandise serving suburban and farm consumers. The retailer also offers a number of services such as convenience stores, gas stations, car wash and auto service. The company operates 36 stores located throughout Wisconsin, Minnesota, Iowa and North Dakota.

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DESIGN/CONSTRUCTION

Aldi accelerates store expansion as supermarket wars heat up

BY Marianne Wilson

A German discount grocer has set its sights on becoming the third-largest American food retailer by store count, behind Walmart and Kroger.

Aldi said it plans to invest $3.4 billion to open 900 stores by the end of 2022, giving it 2,500 stores nationwide. The grocer currently operates approximately 1,600 stores in 35 U.S. states. Earlier this year, Aldi announced it would invest $1.6 billion in to remodel 1,300 of its stores by 2020.

Aldi's $5 billion investment come at a time of intense competition in the supermarket industry, particularly in the discount niche. On June 15, another German discount grocer, Lidl, will make its U.S. debut, opening the first of 20 stores it plans to open this summer in Virginia, North Carolina and South Carolina. Lidl expects to have up to 100 stores across the East Coast

by 2018.

In May, Lidl said it would price products up to 50% lower than rivals. Meanwhile, Walmart is also testing lower prices in select states as it look to win back its position as the low-price leader.

"We pioneered a grocery model built around value, convenience, quality and selection and now Aldi is one of America's favorite and fastest growing retailers," said Jason Hart, CEO. "We're growing at a time when other retailers are struggling. We are giving our customers what they want, which is more organic produce, antibiotic-free meats and fresh healthier options across the store, all at unmatched prices up to 50% lower than traditional grocery stores."

Aldi has been upgrading the look of its stores with a more modern design that includes open ceilings, wider aisles and more natural lighting. It also is adding more fresh foods, gluten-free options, sustainable seafood, specialty wines and cheeses, and organic items from its SimplyNature line.

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