CAMP HILL, PA-Rite Aid is buying 1,858 drugstores under the Eckerd and Brooks banners from the Jean Coutu Group deal valued at $3.4 billion. The portfolio of stores, which is made up of 1,521 Eckerds and 337 Brooks, is primarily in Northeastern and Mid-Atlantic states.

The acquired stores will all be re-branded into Rite Aids, and the deal will bring the company's total number of stores more than 5,100 units. About 70% of the stores locally based Rite Aid is buying are in markets where it already has a presence. The new states it is entering are Massachusetts, Rhode Island, South Carolina and North Carolina. The transaction will bring the retailer's total store count closer in size to competitors CVS, which has 6,100 units, and Walgreen Co., with 5,400 stores.

Rite Aid is financing the deal with $1.45 billion in cash, and the Montreal-based Coutu Group will gain a 32% common equity interest in Rite Aid, also giving it a 30.2% voting share in the company. Rite Aid is also assuming $850 million in Coutu Group debt. The parties expect to close the deal some time between December and March.

Michel Coutu, president of the Coutu Group's US operations, will become co-chairman of Rite Aid's board, along with Mary Sammons, Rite Aid's president and chief executive officer. The Coutu Group will continue to operate its 327 franchised units in Canada.The Coutu Group bought its share of the Eckerd chain from J.C. Penney in 2004 for $2.38 billion. CVS acquired the other 1,260 units in the chain during the same period for $2.15 billion.

Rite Aid's same-store sales during its most recently reported quarter, which ended June 3, rose 3.6% year over year, on total sales of $4.34 billion. The company's net income dropped to $10.9 million from $23.2 million during the same year-ago period. Rite Aid executives are forecasting the addition of 800 to 1,000 new stores over the next five years.