Walgreens, Rite Aid, Fred's Shake On News Of FTC Plans To Advise Merger Block

And there’s more!

The saga of Rite Aid Corporation RAD, Walgreens Boots Alliance Inc WBA and their merger beneficiary, Fred’s, Inc. FRED, takes yet another twist.

The Federal Trade Commission allegedly prepared advice to block the companies' intended deal Friday, according to Capitol Forum. Rite Aid shares plummeted 16 percent, Fred’s 6 percent and Walgreens 0.7 percent on the news.

The report provides more definitive follow-up on mid-May rumors that two FTC commissioners were split on the antitrust review. A split decision would have permitted completion of the buyout at the latest per-share price terms of $6.50 to $7.

Earlier in the month, news that Walgreens and Rite Aid certified substantial FTC compliance merited hope in the process and prompted shares higher.

Investors have been tugged back and forth on the deal’s potential since Walgreens posted its initial $9-per-share bid in October 2015. The case has been held up by the FTC since July 2016, when the pair were advised to divest assets.

Fred’s emerged as a buyer in December 2016, but Walgreens and Rite Aid remained under the critical eye of the FTC, which has since evaluated the merger on antitrust concerns.

Walgreens and Fred’s spokespersons declined to comment on the latest turn.

At time of publication, Rite Aid recovered slightly to trade down 13 percent, while Fred’s turned positive.

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Image: Mike Mozart, Flickr