The ongoing saga that is the merger between Rite Aid Corporation (NYSE:RAD) and Walgreens Boots Alliance, Inc. (NASDAQ:WBA) appears to be in the homestretch, with a yes or no vote expected from the Federal Trade Commission by July 31.

I’m going to go out on a limb and suggest that the FTC approves the merger between the two drugstore chains; further, Walgreens pays $7.00 for RAD stock, the high end of its revised offer tabled in January.

The question I will answer for current owners of RAD stock is whether you should roll the proceeds into WBA stock once the deal closes.

Case for Buying Walgreens

Many investors consider owning drugstore stocks a good idea because the demand for pharmaceutical drugs isn’t going away any time soon. If you look at Walgreens, Rite Aid and CVS Health Corp (NYSE:CVS), you’ll see that all three generated almost 70% of their overall revenue in fiscal 2016 from pharmacy services.

In both good times and bad, people keep going to the drugstore. If volatility scares you, drugstore stocks are healthcare’s version of the consumer staple. They may be boring, but they’re also vitally important to you staying upright.

A combined Rite Aid/Walgreens will have approximately 16,700 stores in 11 countries (13,200 from WBA and 3,500 from Rite Aid after the sale of 1,000 stores). Their combined annual revenues will be north of $147 billion, even after it sells the Rite Aid stores, as required by the FTC.

“The debt-financed Rite Aid acquisition offers WBA the ability to strengthen its competitive position and generate significant procurement and cost synergies,” wrote Fitch in a recent report.

If you include the $1 billion in synergies from the deal, a Rite Aid/Walgreens combination will generate annual EBITDA profits of $9.4 billion. Fitch believes the combined company could have $12 billion in EBITDA by 2020.

How does that compare to its bigger rival, CVS?

In fiscal 2016, CVS had EBITDA profits of $11.8 billion from $178.8 billion in revenue, an EBITDA margin of 6.6%, just 20 basis points higher than a Rite Aid/Walgreens combination.

In addition, the typical Walgreens generates $300 per square foot in sales, compared to $200 or so at Rite Aid. Once Walgreens works its magic, investors can expect both revenue and profit to grow.

Case for Taking a Pass

Assuming Walgreens pays $7 billion in cash for Rite Aid, along with the assumption of $7 billion in debt, the merged company would have an enterprise value of $114.6 billion, or 12.2 times EBITDA. You can currently pick up CVS for less than nine times EBITDA or 6.8 times EBITDA if you buy Express Scripts Holding Company (NASDAQ:ESRX), a pharmacy benefit manager.

Not only can you get better value elsewhere, the amount of debt held by the merged company will be substantial. Fitch pegs the amount at $25 billion, or two times its projected 2020 EBITDA of $12 billion. CVS’s current long-term debt is $27.5 billion, or approximately two times its current EBITDA of $13.1 billion.

I’d expect CVS to reduce debt and increase EBITDA over the next four fiscal years, lowering its leverage position significantly.

Bottom Line on RAD Stock

I believe that Walgreens’ move to force the FTC’s hand is a serious gamble, but clearly it can wait no longer. I still question whether this gets the green light, though.

The combination makes a lot of sense for RAD. If the deal goes through, I would pass on Walgreens and put the funds to use elsewhere, despite the fact I do believe it could extract value from Rite Aid’s operations.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.