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For now,
Just six weeks ago, Walgreens announced a new agreement to buy Rite Aid at a revised price that the parties said would be “a maximum of $7.00 per share and a minimum of $6.50 per share.” That's less than the $9 Walgreens agreed to pay for Rite Aid in 2015.
But the value of Rite Aid shares have been battered ever since that deal was announced amid reports Walgreens might force the Federal Trade Commission to make a quick decision, making the merger’s fate is uncertain. This week, Rite Aid shares were hovering between $4.50 and $4.90 per share even as reports swirled more suitors were emerging to buy even more divested Rite Aid stores.
The New York Post, citing sources, last week said Walgreens may soon “declare it has a ‘certified compliance’ in its application,” a declaration the newspaper said means the drugstore chain has “given regulators substantially all the information they need to make a decision.”
If Walgreens is pursuing such an action, the FTC would then have to speed up a review of a deal that was first announced two years ago, antitrust legal analysts say.
“What this means is Walgreens wants to force the FTC’s hand to either litigate or accept the deal,” said David Balto , a former policy director at the Federal Trade Commission in an interview. “They want to get this resolved. I tend to think Walgreens has a good case if they litigate.”
Meanwhile, Walgreens and Rite Aid are said to have potential bidders lined up to buy Rite Aid stores that are likely to be sold if the FTC eventually approves the merger. Walgreens isn't commenting on its ongoing talks with the FTC nor its discussions about potential divestitures.
Walgreens has already said it will be required to divest up to 1,200 Rite Aids “and certain related assets" if required to obtain regulatory approval. That means the specific price of the total Rite Aid purchase will “be determined based on the number of required store divestitures, with the price set at $7.00 per share if 1,000 stores or fewer are required for divestiture and at $6.50 per share if 1,200 stores are required for divestiture.”
A Bloomberg News report Tuesday afternoon indicated Walgreens is working on a new deal with Fred's that will "include more stores than the 865 that Walgreens initially agreed to sell."
Among those lined up to buy Rite Aids include Fred’s, Inc., which operates stores in 15 southeastern states. Last year, Fred’s CEO Michael Bloom described the acquisition of stores to be a “transformative event for Fred’s Pharmacy that will accelerate” its healthcare growth strategy.
Fred’s wants to shift from its “past heritage as Fred’s Super Dollar” to focus on “personal healthcare,” the company has said. Fred’s has 648 discount general merchandise stores, but not all have pharmacies. There are 370 “full-service pharmacy departments located within Fred’s stores,” the company’s website says.