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NEW YORK — Shares of Rite Aid crossed the $2 mark Wednesday afternoon following analyst speculation about the prospects of a takeover by Walgreens, according to published reports.
The New York Times reported that a report by a Credit Suisse analyst about why Walgreens "may" take over Rite Aid pushed the company's stock up 9.6%, to $2.06, its highest level in four years, though it settled back down to $1.95 later in the afternoon. A Rite Aid spokeswoman told Drug Store News that the company had a policy of not commenting on industry speculation, and the Credit Suisse analyst, Edward Kelly, wrote that while strategically sensible, the deal could be too risky for Walgreens.
It's not the first time Wall Street analysts have sought to create a buzz about the idea of the country's largest retail pharmacy chain taking over the third largest. In November, analysts at Susquehanna Financial Group made similar statements, causing Rite Aid's stock to go up by 7%.
Rite Aid, with just under 4,700 stores, compared with Walgreens' more than 7,800, has carried a heavy debt load since its 2007 takeover of the Brooks and Eckerd drug store chains and has experienced numerous store closures. Nevertheless, it has sought to create growth through investments such as its Wellness+ loyalty card program, which has grown tremendously since its 2010 launch and generated widespread sales growth, including a 3.1% increase in comps in February. The chain also has been revamping its look with its Wellness store format, having completed 159 remodels as of December. And last month, it moved to refinance its debt with a $481 million bond offering.