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Tracey Ryniec and David Bartosiak, Stock Strategists at Zacks Investment Research, discuss Walgreens Boots Alliance, Inc. (WBA – Analyst Report) offer to buy Rite Aid Corporation (RAD – Analyst Report) for $9.00 per share in cash, for a total value of $17.2 billion.

This would be the second large deal by Walgreens in the last 2 years, as it entered into the Boots Alliance merger in 2014 which expanded its reach into 11 countries.

The acquisition of Rite Aid would give it an additional 4600 locations in the United States, on top of its 8200 stores, and vault it solidly into second place among the drugstore chains. According to analysts, the combined Walgreens/Rite Aid entity would have about a 41% market share, compared to 58% for CVS.
 
Walgreens already has solid fundamentals. It doesn’t appear to need this deal to get growth. Earnings are expected to grow 15% this year and another 16% next year. That’s not too shabby for this Zacks Rank #2 (Buy).  
 
But it doesn’t appear to be a done deal. It will face certain regulatory scrutiny given that it would consolidate the pharmacy business into 2 big players. 
 
Additionally, what is going on with Rite Aid’s stock? Dave discusses the strange trading action in those shares.

Who will really benefit from this deal: the Walgreens or the Rite Aid shareholders? 

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