Fred’s, Inc. (NASDAQ: FRED) is having an overwhelmingly strong start to the trading session in the pre-market hours this morning, and for good reason. The company announced that it has entered into an asset purchase agreement with Walgreens (WBA). As you could imagine, the news excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The asset sale;
- what we’re seeing from FRED as a result; and
- what we’ll be watching for ahead.
FRED Announces Asset Sale
As mentioned above, Fred’s is having a great start to the trading session in the pre-market hours this morning after the company announced that it has entered into an asset purchase agreement. In a press release issued early this morning, the comapny said that it has entered into a definitive agreement with Walgreens.
Under the terms of the agreement, WBA will acquire all pharmacy patient perscription files and related pharmacy inventory of 185 FRED locations across 10 Southeastern states. According to the release, Walgreens has agreed to pay the company $165 million for the purchase of these files and related inventory. The agreement also stipulates that on top of the $165 million, Walgreens will pay an amount equal to the value of related pharmacy inventory. In a statement, Rich Ashworth, President of Operations at Walgreens had the following to offer with regard to the deal with FRED:
This agreement increases patient access to Walgreens pharmacies in the Southeastern U.S., and allows us to introduce more people to Walgreens trusted pharmacy services in these communities. We look forward to welcoming Fred’s patients and team members who are hired into available Walgreens positions.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Fred’s, the news proved to be overwhelmingly positive. After all, this asset sale will lead to an immediate and quite large injection of funding. So, it comes as no surprise that excited investors are sending the stock on a run for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:51), FRED is trading at $2.39 per share after a gain of $0.76 per share or 46.18% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on FRED. In particular, we’re interested in following the story surrounding the company’s sale to Walgreens as it hasn’t closed quite yet. Nonetheless, we don’t anticipate any issues. We’ll continue to follow the story closely and bring the news to you as it breaks!
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