Walgreens Boots Alliance executives indicated that the Rite Aid merger is still in the works at the company’s shareholder meeting on Thursday.
When an individual shareholder inquired about the deal, chief executive officer Stefano Pessina said, “We cannot comment because…the FTC [U.S. Federal Trade Commission] is doing their job, but it’s a process that’s going on and we cannot comment what the FTC is doing. The only thing I can repeat is that we are actively engaged [in] dialogue with the FTC and we will do everything we can to support their work, and these days we are discussing with Rite Aid…all the instruments and all the actions that we can put in place, we facilitate this process.”
Pessina’s comment came the day before the deal’s deadline, Jan. 27. Rumblings that the deal may not go through surfaced in mid-January, causing stock prices for both companies to dip. Walgreens shares were trading at about $81.96 Thursday morning, while Rite Aid shares jumped to around $7.20.
Walgreens agreed to pay $9.4 billion for Rite Aid back in October 2015, but after FTC examination of the deal, Walgreens announced it would need to divest between 500 and 1,000 stores in order to close the transaction, which it has said it expects to do in early 2017. Rite Aid operates about 46,000 stores in 31 states and the District of Columbia.
As part of that divestment plan, the parties agreed to sell 865 Rite Aid stores to Fred’s Pharmacy for $950 million, which would transform Fred’s into the third-largest pharmacy chain. It’s possible that Fred’s could end up with even more stores if the FTC were to require further divestment.
Earlier in January, Walgreens raised its financial guidance for 2017 after reporting a dip in net earnings and net sales. The company called beauty out as a highlight, saying that it’s beauty enthusiast loyalty program is driving higher-than-expected incremental spend among members, and saying that sales of No7 and Soap and Glory were up.