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Rite Aid (RAD) Sells Stores for Walgreens Merger, Stock Up
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Drug-store retailer Rite Aid Corporation flaunts an impressive stock performance history, evident from the way it has outdone the Zacks categorized Retail – Drug Stores industry in the past six months. The company’s shares gained 11.4% during this period, while the industry was down 7.6%.
Yesterday, this Pennsylvania-based companys shares hit a 52-week high of $8.69, before eventually closing the trading session at $8.61, reflecting a 5.4% upside. Notably, shares got a boost from the news of its deal with Walgreens Boots Alliance Inc. (WBA - Free Report) to sell 865 Rite Aid stores and some assets to Fred's Inc. for $950 million in cash.
Also, if the Federal Trade Commission demands any more divestitures, Fred’s will have to buy other Rite Aid stores, following Walgreen’s approval.
This agreement brings Rite Aid and Walgreens a step closer to satisfying antitrust requirements for their long-awaited merger, which was announced in Oct 2015 and expected to close on Jan 27, 2016.
The deal also gave a significant boost to Fred’s, which is likely to become one of the biggest drugstore players in the country by expanding its geographic reach, with its shares soaring 81.1%.
In fact, sources revealed that the buyout of Rite Aid’s stores will more than double Fred’s store count, and make it the third-largest drug store chain in the industry. This will also help the Memphis-based retailer to compete better with big wigs like Wal-Mart Stores, Inc. (WMT - Free Report) and The Kroger Co. (KR - Free Report) . Nonetheless, during the transition phase, Fred’s will operate Rite Aid’s stores under the latter’s banner.
Apart from Fred’s, the deal will also benefit Walgreens as this mega merger is expected to be accretive to its earnings per share within the first year of completion. Walgreens also anticipates synergies of over $1 billion from the deal. In a nutshell, the acquisition of Rite Aid would enable Walgreens to deliver on its goals of offering distinguished in-store experience for health, wellness and beauty given that both the companies share the same vision on this front.
All said, Rite Aid and Walgreens expect the merger to create a drugstore behemoth with a superior network, offering more health and wellness solutions both in stores and online. The combined company will operate over 12,000 stores in the U.S. and fill over one billion prescription drugs every day.
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Rite Aid (RAD) Sells Stores for Walgreens Merger, Stock Up
Drug-store retailer Rite Aid Corporation flaunts an impressive stock performance history, evident from the way it has outdone the Zacks categorized Retail – Drug Stores industry in the past six months. The company’s shares gained 11.4% during this period, while the industry was down 7.6%.
Yesterday, this Pennsylvania-based companys shares hit a 52-week high of $8.69, before eventually closing the trading session at $8.61, reflecting a 5.4% upside. Notably, shares got a boost from the news of its deal with Walgreens Boots Alliance Inc. (WBA - Free Report) to sell 865 Rite Aid stores and some assets to Fred's Inc. for $950 million in cash.
Also, if the Federal Trade Commission demands any more divestitures, Fred’s will have to buy other Rite Aid stores, following Walgreen’s approval.
This agreement brings Rite Aid and Walgreens a step closer to satisfying antitrust requirements for their long-awaited merger, which was announced in Oct 2015 and expected to close on Jan 27, 2016.
The deal also gave a significant boost to Fred’s, which is likely to become one of the biggest drugstore players in the country by expanding its geographic reach, with its shares soaring 81.1%.
In fact, sources revealed that the buyout of Rite Aid’s stores will more than double Fred’s store count, and make it the third-largest drug store chain in the industry. This will also help the Memphis-based retailer to compete better with big wigs like Wal-Mart Stores, Inc. (WMT - Free Report) and The Kroger Co. (KR - Free Report) . Nonetheless, during the transition phase, Fred’s will operate Rite Aid’s stores under the latter’s banner.
Apart from Fred’s, the deal will also benefit Walgreens as this mega merger is expected to be accretive to its earnings per share within the first year of completion. Walgreens also anticipates synergies of over $1 billion from the deal. In a nutshell, the acquisition of Rite Aid would enable Walgreens to deliver on its goals of offering distinguished in-store experience for health, wellness and beauty given that both the companies share the same vision on this front.
All said, Rite Aid and Walgreens expect the merger to create a drugstore behemoth with a superior network, offering more health and wellness solutions both in stores and online. The combined company will operate over 12,000 stores in the U.S. and fill over one billion prescription drugs every day.
Rite Aid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>