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On Monday, shares of retail drugstore chain Rite Aid are tanking, down around 17% in afternoon trading after Walgreens Boots Alliance (WBA - Free Report) said it would pay a lower price per share its pending acquisition of the company.
Under the new terms of the deal, Walgreens will pay a maximum of $7 per share and a minimum of $6.50 per share for Rite Aid stock. Back in October of 2015, the pharmacy behemoth agreed to purchase Rite Aid for $9 per share in cash.
In addition to the new lower price, Walgreens will also divest up to 1,200 Rite Aid stores, which is 200 more than the original agreement had specified, as well as “additional related assets if required to obtain regulatory approval,” said Rite Aid in a statement.
This means that the total cost of the deal depends on the number of required store divestitures. Rite Aid explains that the price would be set at $7 per share if 1,000 stores or fewer are required for divestiture, or $6.50 per share if 1,200 stores are required for divestiture.
The deadline for the deal has been pushed back from January 27 to July 31. The agreement still sees Walgreens acquiring all outstanding shares of Rite Aid.
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Here's Why Rite Aid (RAD) is Tanking 17% Today
On Monday, shares of retail drugstore chain Rite Aid are tanking, down around 17% in afternoon trading after Walgreens Boots Alliance (WBA - Free Report) said it would pay a lower price per share its pending acquisition of the company.
Under the new terms of the deal, Walgreens will pay a maximum of $7 per share and a minimum of $6.50 per share for Rite Aid stock. Back in October of 2015, the pharmacy behemoth agreed to purchase Rite Aid for $9 per share in cash.
In addition to the new lower price, Walgreens will also divest up to 1,200 Rite Aid stores, which is 200 more than the original agreement had specified, as well as “additional related assets if required to obtain regulatory approval,” said Rite Aid in a statement.
This means that the total cost of the deal depends on the number of required store divestitures. Rite Aid explains that the price would be set at $7 per share if 1,000 stores or fewer are required for divestiture, or $6.50 per share if 1,200 stores are required for divestiture.
The deadline for the deal has been pushed back from January 27 to July 31. The agreement still sees Walgreens acquiring all outstanding shares of Rite Aid.
Stocks that Aren't in the News…Yet
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year. See these high-potential stocks now>>