(Reuters) – Drugstore chain Walgreens Boots Alliance Inc <WBA.O> stated its deal to purchase smaller rival Rite Aid Corp <RAD.N> would now take six months longer to shut and in addition decreased its offer price because it expects to divest extra shops to realize regulatory approval.
The corporations stated on Monday they agreed to scale back the offer price to $6.50-$7.00 per share, valuing Rite Aid at $6.84 billion-$7.37 billion. Walgreens had provided $9 per share in October 2015 when it first proposed the deal.
Rite Aid shares closed down 17.5 % at $5.72, easing barely after hitting a two-year low of $5.70, on Monday. Walgreens ended 2 cents decrease at $81.48.
Under the revised phrases, Walgreens will now have to divest as much as 1,200 Rite Aid shops, 200 greater than earlier agreed. The deal is now anticipated to shut on July 31, in contrast with the earlier goal of Jan. 27.
Walgreens had struck a deal in December to promote 865 shops to Fred’s Inc <FRED.O>, however a Bloomberg report final week stated the U.S. antitrust regulator was not glad with the plan.
“The one remaining uncertainty is who buys the incremental boxes as it is not clear to us that FRED has the financing capacity to do so,” Evercore ISI analyst Ross Muken stated in a observe.
Fred’s confirmed that the beforehand agreed deal remained in impact and stated it continued to work with the Federal Trade Commission (FTC), Rite Aid and Walgreens to finish the deal.
Deerfield, Illinois-based Walgreens additionally minimize its 2017 adjusted earnings forecast to $four.90-$5.08 per share from $four.85-$5.20. (http://bit.ly/2kjpNFu)
Walgreens stated it will pay $7.00 per share if regulators required 1,000 shops or fewer to be divested and $6.50 per share for 1,200 shops, with the offer price being adjusted on a pro-rata foundation for divestitures between 1,000-1,200 shops.
The six-month extension marks the second time Walgreens has pushed out the date by which it had anticipated to shut the deal.
Walgreens Chief Executive Stefano Pessina stated final week that the corporate was urgent on to shut the deal with Rite Aid and was actively engaged in talks with the FTC.
Walgreens has 13,200 shops, almost 60 % of that are within the United States, whereas Rite Aid has four,570 shops.
(Reporting by Siddharth Cavale, Ankur Banerjee and Gayathree Ganesan in Bengaluru; Editing by Shounak Dasgupta and Savio D’Souza)