Rite Aid Corporation (NYSE: RAD) is having a relatively strong start to the trading session in the pre-market this morning, and for good reason. The company announced today that it has received regulatory clearance to sell 1,932 stores and more. Of course, this led to excitement among investors, pushing the stock upward and prompting our partners at Trade Ideas to alert us to the movement. At the moment (8:30), RAD is trading at $2.76 per share after a gain of $0.03 per share or 1.10% thus far today.
RAD Gains On Regulatory Clearance To Sell Stores
As mentioned above, Rite Aid Corporation is having a relatively strong start in the pre-market hours this morning after it announced that it has received regulatory clearance to sell nearly 2,000 stores. Under the deal, Walgreens Boots Alliance, Inc. (NASDAQ: WBA) will purchase 1,932 stores, 3 distribution centers and related inventories. Under the terms of the agreement, WBA will be paying RAD a total of $4.375 billion in cash for the acquisition of the stores on a cash-free, debt-free basis. The deal also gives Rite Aid the ability to purchase generic drugs that are sourced through an affiliate of WBA at a cost that is equivalent to Walgreens for a period of 10 years.
The agreement is part of a deal that was announced earlier. However, the deal has been amended, giving RAD the ability to retain approximately 250 additional stores when compared to the original agreement that was signed in 2017. In a statement, John Standley, Chairman and CEO at RAD, had the following to offer...
“Securing regulatory clearance provides us with a clear path forward to realize the benefits of this transaction. With a compelling and more profitable store footprint in key markets, enhanced purchasing capabilities and a stronger balance sheet and improved financial flexibility, we are well positioned to implement our plans to deliver improved results... I am proud of our entire Rite Aid team for their extraordinary efforts during this process and their tremendous dedication to taking great care of our customers and patients. We are committed to supporting a smooth transition as we remain focused on delivering a great customer experience, improving our business and creating value for all of our stakeholders.”
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on RAD. In particular, we're interested in following the story surrounding the sale of the stores and excited to see how the company uses the funds and the new opportunities on the generic purchasing front. Nonetheless, we'll continue to follow the story closely and bring the news to you as it breaks!
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