Fred’s Pharmacy (FRED) Just Made A Huge Purchase From Rite Aid (RAD)

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Shares of Rite Aid were soaring on Tuesday after Fred’s Pharmacy (FRED) announced that it would acquire 865 Rite Aid stores.

Fred’s Pharmacy announced that it has signed an agreement with Walgreens (WBA) and Rite Aid to purchase the stores and certain assets related to store operations for $950 million in an all cash transaction.

Fred’s Pharmacy could be on its way to becoming the third largest drug store chain in the U.S. if the transaction is approved.

Shares of Rite Aid (RAD) gained 5 percent Tuesday after Fred’s Pharmacy (FRED) said it agreed to acquire 865 stores.

“We believe that this transaction will also create tremendous opportunities for both our new and existing front of store and pharmacy team members,” Fred’s Pharmacy CEO Michael Bloom said in a statement.

Walgreens is currently in the process of acquiring Rite Aid but it is subject to approval by the Federal Trade Commission. The transaction with Fred’s Pharmacy is anticipated to take place several months after Walgreens completes its transaction of Rite Aid.

Disclaimer: We have no position in Walgreens Boots (NASDAQ: WBA), Rite Aid Corporation (NYSE: RAD) nor Fred’s Inc. (NASDAQ: FRED) and have not been compensated for this article.