Walgreens (WBA)/Rite Aid (RAD) Divested Stores Will Likely Go to Strategic Buyers, Says Deutsche Bank
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
Deutsche Bank maintained a Buy rating on Walgreens Boosts Alliance (NASDAQ: WBA) with a price target of $88. Analyst George Hill thinks most Rite Aid (NYSE: RAD) divested stores will go to strategic buyers.
"We recently caught up with several private equity execs with experience in retail to get their thoughts on the WBA/RAD deal, and PE’s potential role in the process given the news reports. For a deal like this, PE is a buyer of last resort, because both regulators and strategics would prefer to see the stores sold to established competitors. PE buyers would negotiate for very low prices given the challenges of running a small pharmacy business and the investment needed in systems and management. These conversations supported our belief that most of the divested stores will go to strategic buyers. We continue to expect the deal to be completed and maintain our Buy rating on WBA shares," said Hill.
"Having said that, strategics are the last buyers WBA wants to sell stores to, as they will have the most negotiating power and will be the most competitive. The FTC would likely prefer to see the stores sold to a strong competitor in each market to maintain the same level of competition as before the RAD acquisition, which makes them the preferred buyers but also gives them negotiating prowess. These buyers will demand that WBA give up more attractive locations (even current Walgreens locations). While WBA would command a higher price from a strategic acquirer compared to private equity, the strategic buyer would be a stronger competitor after the deal closes," added the analyst.
Shares of Walgreens Boosts Alliance closed at $80.09 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Rite Aid (RAD)/Walgreens (WBA) Antitrust Concerns Doesn't Mean Deal is Dead, Says Deutsche Bank
- Deutsche Bank Sees 'Encouraging' Short-Term Set-Up in Valeant (VRX)
- M&T Bank (MTB) PT Raised to $165 at FBR Capital Following 4Q Beat
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Hot Comments
Related EntitiesDeutsche Bank, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!