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Rite Aid Corporation (RAD) Stock Cracks With Walgreens Merger in Doubt

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Rite Aid Corporation (NYSE: RAD ) plunged, were halted and remained considerably lower after resuming trading after a Friday report that puts its merger with Walgreens Boots Alliance Inc (NASDAQ: WBA ) in serious doubt.

Why Rite Aid Corporation (RAD) Stock Isn’t as Risky as You Thought

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Bloomberg reported on Friday that people familiar with the matter say Walgreens' blueprint for gaining Federal Trade Commission approval is coming up short in the eyes of FTC lawyers . The biggest concession of the deal is the sale of 865 drugstores to Fred's Inc .

RAD stock gained more than 20% on the Oct. 27, 2015, report that Walgreens - the country's No. 2 chain by store locations - would buy America's No. 3. Since then, shares have mostly hung around the $8 level, with a few peaks and valleys depending on sentiment about the deal.

That said, RAD had accelerated nicely since President Trump's election, not just on the broader market's back but also on increasing optimism that the deal would be approved.

Now, however, after more than a year of review, the FTC reportedly still has competition concerns, which means the deal might not go through by a Jan. 27 deadline.

While some believed the RAD-WBA merger would be approved today, Betsy Lordan, senior public affairs specialist for the Federal Trade Commission, told Drug Store News via email:

"[The decision] won't happen [on Inauguration Day]. More generally, however, we do not confirm or comment on merger investigations until/unless we are announcing legal action such as a complaint or (in some cases) a complaint and proposed settlement."

If the deal falls through, Rite Aid would receive either $325 million or $650 million in termination fees.

WBA stock also was off about 2% on Friday. Walgreens stood to become the nation's No. 1 pharmacy in the tie-up.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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