Status Update: The Walgreens–Rite Aid Acquisition Deal
Is Walgreens–Rite Aid deal near conclusion?
According to a Bloomberg report dated September 18, 2018, Walgreens Boots Alliance (WBA) and Rite Aid (RAD) have moved toward closing their long-awaited acquisition deal. The two companies are in late-stage negotiations with the FTC (Federal Trade Commission). However, Walgreens might have to tweak the deal once again. That would be WBA’s fourth attempt to secure FTC approval.
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About the journey of the deal
In October 2015, Walgreens proposed to acquire Rite Aid for $17.2 billion, or $9 per share. Failing to get FTC approval on concerns of diminishing competition, the company modified the deal several times.
It first proposed to sell 1,200 Rite Aid locations to Fred’s (FRED) to satisfy the FTC. It also lowered the deal value by about $2.0 billion. However, the FTC still wasn’t happy.
In June 2017, the two companies terminated the initial deal to enter into a new agreement. Instead of buying all 4,500 Rite Aid stores, Walgreens agreed to purchase 2,186 stores. The new transaction was valued at $5.2 billion. The takeover is likely to take place over a period of six months. If the deal closes, Rite Aid stores would operate under the Walgreens brand name.
The entire deal drama cost Rite Aid its stock value. Read the next part to see its recent stock performance and Wall Street’s take on the company.
ETF investors seeking to add exposure to Walgreens or Rite Aid can consider the SPDR S&P Retail ETF (XRT), which invests 2.5% of its combined portfolio in the two companies.