Walgreens, Authentic Brands, Kourtney Kardashian among those evaluating Rite Aid assets, sources say

Walgreens and Authentic Brands are evaluating Rite Aid's remaining assets amidst its bankruptcy proceedings, with Authentic Brands, WHP Global, and Marquee Brands potentially eyeing Rite Aid's intellectual property and loyalty program. Kourtney Kardashian has expressed interest in acquiring Rite Aid's Thrifty ice cream brand, either independently or with a partner, as Rite Aid seeks to offload assets by a June 18th deadline following store closures and the sale of prescription files to competitors like CVS and Walgreens.

Analysis

Rite Aid is undergoing its second bankruptcy proceeding in two years, leading to the evaluation and potential sale of its remaining assets, including intellectual property, its loyalty program, and the Thrifty ice cream brand. Pharmacy chain Walgreens (WBA.O), which has already secured approval to acquire some of Rite Aid's customer prescription files alongside CVS Health (CVS.N) and others, is reportedly considering additional Rite Aid assets. Several brand management companies, namely Authentic Brands Group (AUTH.N), WHP Global, and Marquee Brands, are assessing Rite Aid's intellectual property and potentially its loyalty program; these firms have a track record of acquiring and licensing IP from bankrupt retailers such as Forever 21, Toys "R" Us, and BCBG Max Azria. Separately, Kourtney Kardashian, co-founder of Lemme and owner of Poosh, along with some consumer-focused private equity firms, has expressed interest in acquiring Rite Aid's Thrifty ice cream brand, a long-standing brand launched in 1940. Rite Aid, which operated approximately 1,200 stores and served around 8 million customers, has struggled due to a high debt load, inflationary pressures, and heightened competition. The bid deadline for these remaining assets is set for June 18th.

Key Decisions for Investors

• Equity holders in Rite Aid (RAD) face a highly unfavorable situation, as bankruptcy proceedings typically prioritize creditors, making significant recovery for shareholders improbable.
• Investors in Walgreens (WBA) and CVS Health (CVS) should monitor the impact of acquired Rite Aid prescription files on customer acquisition and market share; Walgreens' further interest in assets represents a potentially opportunistic, though likely minor, expansion.
• The interest from specialized firms like Authentic Brands Group (AUTH) in Rite Aid's IP and loyalty program, and from parties like Kourtney Kardashian in the Thrifty brand, highlights a strategy of acquiring distressed assets for revival, which carries potential for significant returns but also inherent risks.
• The outcome of the asset bidding process, with a deadline of June 18th, will be critical in determining the residual value extracted from Rite Aid and which entities will attempt to monetize these assets.