Rite Aid Corporation (NYSE:RAD) is Seeing Price Increase on Merger Update

Rite Aid Corporation (NYSE:RAD) is Seeing Price Increase on Merger Update


Rite Aid Corporation (NYSE:RAD) shares are rising on news that Walgreen’s is revising the deal between the two drug store chains to quell ant-trust concerns. RAD shares rose 4.75% to 2.76 in morning trade in the stock market today.

Walgreen’s is said to be in the final stage of talks with the Federal Trade Commission. Months of negotiations with regulators followed the initial 2015 merger announcement, and Walgreens in late June nixed buyout talks, agreeing instead to acquire half of Rite Aid’s locations for about $5.2 billion, plus a $325 million termination fee.

Rite Aid Corporation (NYSE:RAD) is one of the nation’s leading drugstore chains with more than 4,500 stores in 31 states and the District of Columbia and fiscal 2017 annual revenues of $32.8 billion.

Rite Aid Corporation is a retail drugstore chain. The Company’s segments include Retail Pharmacy and Pharmacy Services. The Company operates under The Rite Aid name. It operates approximately 4,560 stores in over 30 states across the country and in the District of Columbia. The Company’s Retail Pharmacy segment consists of Rite Aid stores, RediClinic and Health Dialog. It sells brand and generic prescription drugs, as well as an assortment of front-end products, including health and beauty aids, personal care products, seasonal merchandise, and a private brand product line. Its front-end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise and numerous other everyday and convenience products. The Company’s Pharmacy Services segment consists of EnvisionRx, which provides a range of pharmacy benefit services.

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Traders should also expect a greater level of interests paid to the next earnings release, as it will be a key indicator of Rite-Aid’s future ability to attract another buyer for the company. In any case, we should see some volatility in the stock in the meantime.

RAD has managed to grow revenues in its brick-and-mortar businesses but this has failed to translate to the bottom line, and many investors have grown skeptical of the possibility that any company is willing to buy further into RAD’s asset base. Total debt figures are growing at a rate of 4% based on the numbers seen last quarter and this is only adding to the argument that the company is a sinking ship in its final stages.

Rite Aid Corporation (NYSE:RAD) has a $2.84B market cap with 1.05B in outstanding shares. Many have been waiting for news on the merger but few know exactly which way the stock will be going after the deal is finalized and Walgreen’s resolves the situation. The earnings will be put under the microscope, so stay tuned as we follow up later this month. Sign-up for continuing coverage on shares of $RAD stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $RAD, either long or short, and we have not been compensated for this article.

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