The Rite-Aid – Walgreens merger saga is coming to an end after two years of merger approval issues. The end result will be $6.50-$7.00 of cash out per each Rite-AID (RAD) share. I believe it will end up being at $6.50. The stock is trading currently at $3.83 which means you will double your money on closing. The only thing that can hold this up is if FTC blocks the merger. With Amazon coming to the retail pharmaceutical business, I do not see an argument that FTC can make to block the merger.
The FTC would be doing a disservice to prevent this merger. Amazon already has a hold of the retail market. It wouldn’t be tough for them to change their structure to take over the pharmacy business as well. Amazon can easily make a subscription model to customers that need antibiotics, cough syrups, medicines, etc. without going to your local CVS, Walgreens, Fred, Rite-AID, etc. that would be cheaper and require less employees.
If you like to gamble, feel free to pick up some Rite-AID (RAD) shares. The company is also coming out with earnings on Thursday so there is a lot of public news that will be out this week and next week. The price was recently at $4 a share but has gone down to $3.81 this morning making this a good purchase. If at worse case they do not merge, Rite-Aid will definitely go down to $2 per share which would still be a nice buy for a company that other competitors are interested in purchasing.
Disclosure: Long RAD stock and Long with RAD naked puts
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