Is today the day the Walgreens, Rite Aid deal is approved?


NEW YORK  — Is today the day? The much anticipated approval for the Walgreens/Rite Aid merger, through which Walgreens has proposed to pay $9.4 billion for the acquisition of Rite Aid's 4,547 stores in an effort to bolster its national footprint, did not happen by Friday morning as many had speculated.

Now there is a new countdown clock — the deal is set to expire Jan. 27 if not approved before that time.

It turns out DSN readers were right. While four-in-10 thought it would happen before Inauguration Day, there were 59% who believed the decision the Walgreens/Rite Aid deal would not be approved before Donald Trump is sworn in as the 45th U.S president. And it's not going to actually happen on Inauguration Day because government offices in the District of Columbia are closed on Friday, FTC officials told DSN.

"[The decision] won’t happen [on Inauguration Day]," confirmed Betsy Lordan, senior public affairs specialist for the Federal Trade Commission in an email to DSN. "More generally, however, we do not confirm or comment on merger investigations until/unless we are announcing legal action such as a complaint or (in some cases) a complaint and proposed settlement."

Breaking down the numbers in DSN's Walgerens/Rite Aid poll, out of the 249 readers who believed the decision would come after Inauguration Day 55.8% still think it's going to happen and 44.2% believe it won't.

Many hold to the belief that a Federal Trade Commission operating under a Republican administration will be "big-business" friendly and therefore more likely to approve the deal. In an early December research note published the week before the announcement that Fred's would acquire 865 divested Rite Aid stores, Leerink managing director David Larsen wrote, "With Trump as President we believe the FTC will be more willing to work with Walgreens Boots Alliance and potential buyers of Rite Aid stores in order to allow the transaction to close."

But that's not necessarily the case, cautioned Scott Mushkin, managing director and senior retail analyst for Wolfe Research, especially given the nonconformist stance President Trump has taken on many issues. "The historical context here doesn't matter because Trump has shown himself to be somewhat anti-merger," he told DSN. "He's going to look at it more on the merit [of the deal]," he said. "While we continue to view the transaction as a major win for Walgreens Boots Alliance shareholders, we also continue to have some doubts that the transaction will be approved."

So what happened? Why wasn't the deal approved before Jan. 20?

Anaylsts who follow Walgreens Boots Alliance speculate that discussion around rationalizing the Rite Aid store base post merger may have given regulators pause. "We were surprised to hear Walgreens Boots Alliance mention that store base rationalization may be a potential post-acquisition strategy given that that acquisition is still undergoing FTC review," commented Barclays analyst Eric Percher. Percher noted, however, Walgreens Boots Alliance CEO Stefano Pessina is still very bullish on the deal. "Management is very confident of FTC approval," Percher wrote, noting that Pessina acknowledged there is no "Plan B" necessarily should the deal fall through.


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