Tennessee-based pharmacy chain Fred's has agreed to acquire 865 Rite Aid (RAD) - Get Report stores for $950 million in cash following Rite Aid's merger with Walgreens Boots Alliance (WBA) - Get Report .
The divestitures come as a result of Federal Trade Commission antitrust measures resulting from Walgreens' $9.45 billion acquisition of Rite Aid that was initially announced in October 2015.
Fred's shares spiked 76%, or $8.54, in midday trading on the news. Walgreens shares rose less than a percent to $86.42. Rite Aid saw even greater gains, increasing 5.4% to $8.61 apiece.
TheStreet's sister publication, The Deal, previously predicted that Fred's would buy divested Rite Aid stores though the number of stores the Memphis-based pharmacy is picking up is larger than expected.
The deal doubles Fred's 650-store footprint, mainly across the southeastern states. The purchase would presumably give Fred's, which has a mainly rural presence, a larger footprint in urban.
In October, Walgreens' officials noted that they need more time to divest between 500 and 1,000 stores to comply with federal antitrust regulations.
The divestitures are considered an offer to the Federal Trade Commission and are still subject to scrutiny by the agency.
Walgreens previously stated that it expects to realize synergies on its acquisition of Rite Aid of up to $1 billion in the three to four years following the closure of the deal.
Information of what specific locations Fred's will acquire will come once the deal is closed.
Meanwhile, Fred's was unmoved ahead of market's open, but on Monday, saw shares fall 3%, hitting $11.15 per share.