Rite-Aid (RAD) just announced earnings and, more importantly, discussed details of the merger deal. First, the merger deal is off the table. Walgreens will be paying $325 million for the termination agreement. However, Walgreens (WAG) is going to purchase half of Rite-Aid stores for $5.2B. Rite-Aid retains all of its west coast stores but will sell many stores in the other states.
For the long-term outlook, this is a great play on Rite-Aid. There is a chance that another company possibly even Walgreens (WAG) in the future would be interested in Rite-Aid with the potential for the west coast stores and to own their pharmacy benefit manager. Rite-aid is valued over $5 with this current outlook. As long as they can start growing (which they have not in a long long while), there is the potential to move up to $9 which would be their price two years ago before all this merger and acquisition talk.
It is hard to predict where the stock price will be in the short-term. However, if you wish to play this long-term, there is potential in Rite-Aid. If another company wishes to acquire the remaining Rite-Aid, there is a good change you can double your money but don’t expect this to happen anytime soon.