Rite Aid Corporation (NYSE:RAD) took a beating Monday morning after Walgreens Boots Alliance Inc (NASDAQ:WBA) announced it would cut how much it’s paying to acquire the drug store chain to between $6.50 and $7 per share of RAD stock. Rite Aid shares were down more than 16% in response.
Both WBA and RAD today agreed to the sale of 200 more stores (that’s on top of the original 1,000 planned store sales), which directly affects the per-share price of the deal.
If 1,000 or fewer stores are sold off, then WBA will pay $7 per share of RAD stock; while 1,200 store divestitures will lower the per-share value to $6.50.
The original agreement for the merger valued Rite Aid at $9.4 billion, or $9 per share. Today’s price values RAD at roughly $7.1 billion — a steep decline.
What’s more, the pharma retailers have pushed the deadline for the deal from Jan. 27 to July 31. That, as Bloomberg reports, is likely due to regulatory concerns.
If completed, the merger will yield more than 10,000 stores under the combined company, a number that has raised antitrust concerns as the large company would have the upper hand in negotiations with pharmacy benefits managers.
This marks the second time the goal post has been moved, with the two companies originally agreeing on a deadline of Oct. 27, 2016. That news was accompanied with word that Kroger Co (NYSE:KR) might not be interested in taking over 650 stores from both Walgreens and Rite Aid.
“We don’t want even to think the deal could not be approved after so many months,” Walgreens CEO Stefano Pessina said during a call with analysts earlier this month. Unfortunately for Pessina, if the deal were to be blocked, Walgreens’ top line would most likely suffer.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.