Markets
WBA

Rite Aid Stock Soars as Walgreens Approaches Buyout

Shares of Rite Aid RAD are up nearly 40% Thursday, as reports indicating that Walgreens Boots Alliance WBA is nearing a takeover of the company surfaced early in the day. According to the Wall Street Journal , the acquisition is expected to be announced as early as Wednesday.

The deal would bring together the second- and third-largest drugstore chains in the US. After Monday's close, Rite Aid's market capitalization was slightly more than $6 billion. With a typical market premium, the takeover could cost Walgreens nearly $10 billion.

This deal would be the latest in the merger-happy healthcare industry, as the Affordable Care Act has encouraged companies to consolidate and lower costs. There have been mergers between drug makers, insurance providers, and hospitals.

Rite Aid currently has around 4,600 stores in 31 states. It is dwarfed by industry leaders like WBA and CVS CVS , which both have market caps around $100 billion. However, the deal is still huge and is likely to draw the attention of anti-trust regulators.

Shares of Rite Aid fell sharply in September, as costs associated with the company's $2 billion takeover of EnvisionRx, a pharmacy-benefit manager, cut into its earnings outlook.

Walgreens has a Zacks Rank #2 (Buy) and will report its latest quarterly results Wednesday. Shares of WBA are also up on the day, nearing gains of 5%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

RITE AID CORP (RAD): Free Stock Analysis Report

CVS HEALTH CORP (CVS): Free Stock Analysis Report

WALGREENS BAI (WBA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

WBA RAD CVS

Other Topics

Stocks