Rite Aid Corporation (RAD) Spikes on Walgreen Buyout
Shares of Camp Hill, Pennsylvania, based Rite Aid Corporation (RAD) rose on Tuesday, against the backdrop of a slightly lower day in stocks overall. Alcoa's stock was up 42.60%, rising $2.59 per share, to close at $8.67, on volume of 183,722,853 shares. The company announced that it will be purchased by the Walgreens Boots Alliance.
On Tuesday it was announced that a definitive agreement in which Walgreens Boots Alliance (WBA) will acquire all of the outstanding stock of Rite Aid. Walgreens Boots Alliance will purchase the stock for $9 per share in an all-cash deal valued at $17.2 billion, including acquired net debt. The purchase price represents a 48% premium over the closing price of Rite Aid's stock as of Monday, October 26. Walgreens Boots Alliance plans to finance the purchase with a combination of existing cash, assumption of Rite Aid's debt, and the issuance of new debt.
The transaction has been approved by the boards of directors of both companies, and is expected to close in the second half of 2016, subject to regulatory requirements and to approval by holders of Rite Aid common stock. Rite Aid will operate under its own name as a wholly owned subsidiary of Walgreens Boots Alliance.
"Joining together with Walgreens Boots Alliance will enhance our ability to meet the health and wellness needs of Rite Aid's customers while also delivering significant value to our shareholders," said Rite Aid Chairman and CEO John Standley. "This transaction is a testament to the hard work of all our associates to deliver a higher level of care to the patients and communities we serve. Together with Walgreens Boots Alliance, the Rite Aid team can continue to build upon this great work through access to increased capital that will enhance our store base and expand opportunities as part of the first global pharmacy-led, health and wellbeing enterprise."
Walgreens Boots Alliance was created as a result of a combination of Walgreens and Alliance Boots in December, 2014. It is the world's largest retail pharmacy chain, and the largest in both the US and Europe. The company has more than 13,000 locations and 370,000 employees in more than 25 countries.
"Today's announcement is another step in Walgreens Boots Alliance's global development and continues our profitable growth strategy," said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina. "This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients...Walgreens Boots Alliance will provide to Rite Aid its global expertise and resources to accelerate the delivery of integrated frontline care, and to offer innovative solutions for providers, payers and other entities in the U.S. healthcare system. Finally, this combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time."
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