Rite Aid Shares Skyrocket Following Walgreens Buyout Rumor

Rite Aid Corporation RAD shares skyrocketed Tuesday afternoon amid renewed takeover talks. This time, The Wall Street Journal reported that Walgreens Boots Alliance Inc WBA is in "advanced talks" to acquire Rite Aid.

Shares of Rite Aid were halted on a circuit breaker at 12:38 p.m. ET. When trading resumed at 12:41 p.m. ET, the stock jumped 40 percent and hit a high of $8.74 for the day. Shares traded recently at $8.21, up about 35 percent or more than $2.10 per share. Shares of Walgreens were up about 3.5 percent at $92.50.

WSJ noted that as of Monday's closing price, and given a typical takeover premium, the deal could value Rite Aid at around $10 billion.

Calls to Rite Aid and Walgreens were not returned to Benzinga.

Walgreens and Rite Aid are the nation's second- and third-largest drugstore chains. CVS Heath Corp CVS, the nation's largest drugstore chain, spike up on the news and recently traded at $104.45, up 1 percent.

AmerisourceBergen Corp. ABC also moved, recently trading up 3.4 percent at $95.85. Diplomat Pharmacy Inc DPLO popped and was up 3 percent at $25.80.

McKesson Corporation MCK plummeted and was recently down more than 4.7 percent at $180.59. Express Scripts Holding Company ESRX was down 1.7 percent at $83.82

WSJ said a "combination of the pharmacy chains would come amid waves of mergers in various corners of the health-care industry—from drug makers to hospital chains and insurers—as the federal health overhaul known as the Affordable Care Act and other developments pressure companies to lower costs, bulk up and increase leverage with suppliers."

The publication also noted a takeover could draw scrutiny from antitrust regulators.

Back in June, Credit Suisse analyst Edward Kelly said the stock also has another "realistic" avenue for upside through M&A. The analyst believed the industry was poised for further consolidation and Rite Aid was likely to be an attractive acquisition target.

In April, Leerink's David Larsen said Walgreens was more likely to seek to acquire Rite Aid and the latter "is one of the few remaining assets in the U.S. that is large enough to move the needle for [Walgreens]."