RITE AID ACCELERATING INTO AUTO PARTS RETAILING WITH ACQUISITION OF ADAP

Executive Summary

RITE AID ACCELERATING INTO AUTO PARTS RETAILING WITH ACQUISITION OF ADAP, a 32-store automotive supply chain operating in New England and based in Avon, Mass. In a March 20 press release announcing the merger, Rite Aid characterized ADAP as "the largest discount automotive after-market retailer in New England." The automotive parts retailer had sales of $34.2 mil. in 1983, which generated net earnings of $1.3 mil., Rite Aid said. The price of the acquisition was not disclosed. Commenting on the acquisition, Rite Aid noted that ADAP "will provide the talent and experience required for expansion in this highly desirable area of specialty retailing." In buying a retail auto parts business, Rite Aid is following a path blazed by several drug chains including Dart and Hook, mutual owners of Trak Auto, and Perry, which last August purchased the 50-store Fleenor's auto parts retail business. Perry is generally credited with being the first drug chain to move into auto parts retailing within its drug store units. The chain later opened 11 stand-alone Auto Works stores before purchasing the Indiana-based Fleenor's last year. Assuming that the price paid for ADAP as a ratio to sales is roughly similar to what Perry paid for Fleenor's, the price tag for ADAP was probably in the $6 mil.-$8 mil. range -- and possibly higher since ADAP was considerably more profitable at the time of purchase.