(Bloomberg)—Walgreens Boots Alliance Inc. and Rite Aid Corp.’s giant drugstore merger got smaller Monday after the companies said they would cut the value of the deal, may divest more stores to satisfy antitrust regulators and will extend the deadline by which the takeover will be completed.
Walgreens will now pay $6.50 to $7 a share for Rite Aid, the companies said in a statement Monday, giving the deal a value of $6.84 billion to $7.37 billion. That’s down from the $9 a share, or $9.4 billion, announced in 2015. The exact price will depend on how many stores the companies have to divest, raising the ceiling to 1,200 stores, up from 1,000 when the deal was announced.
Shares of Camp Hill, Pennsylvania-based Rite Aid plunged in early trading, and were down 16 percent to $5.79 at 8:53 a.m. in New York. Walgreens shares were up less than 1 percent to $81.79.
The announcement is the latest blow to the drug chains’ attempt to combine. The new agreement also includes a six-month extension to July 31, after the companies had already announced an previous extension. Earlier this month, Bloomberg reported that Walgreens’s plan to win antitrust clearance for its acquisition of Rite Aid hadn’t satisfied FTC officials. The agency’s lawyers reviewing the deal weren’t sold on Walgreens’s plan to resolve competition concerns by selling stores to Fred’s Inc., another retail chain, people familiar with the process said at the time.
Fred’s shares were up 4.7 percent to $14.78 before the markets opened, as investors bet the chain could end up acquiring additional stores. In December, Fred’s agreed to buy 865 Rite Aid locations as part of attempts to satisfy antitrust requirements.
--With assistance from Zachary Tracer. To contact the reporter on this story: Robert Langreth in New York at [email protected] To contact the editors responsible for this story: Drew Armstrong at [email protected] John Lauerman
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