The WalGreens (WBA) And RIte Aid (RAD) Merger May Not Happen

Walgreens and Rite Aid have been patiently waiting to get FTC approval for their merger, but according to people familiar with the matter, Walgreens’s plan to win U.S. antitrust clearance for its acquisition of Rite Aid hasn’t satisfied officials at the Federal Trade Commission.

Walgreen’s potential acquisition of Rite Aid is valued at $9.4 billion and would merge the No. 2 and No. 3 pharmacy chains in the U.S.,

There is only one week left before the company’s deadline to complete the deal which is making things pretty nerve wrecking I imagine.

The two people familiar with the matter said that FTC lawyers aren’t sold on the proposal by Walgreens Boots Alliance to sell 865 drugstores to Fred’s to get approval to take over Rite Aid.

One person said that the officials are concerned the sale doesn’t go far enough to preserve competition that would be lost in the tie-up but it isn’t clear wheather the FTC staff has made a formal recommendation.

The other source said if the deal doesn’t win antitrust clearance, Walgreens would have to pay Rite Aid a termination fee of $325 million or $650 million “in certain circumstances,” according to a company filing.

Disclaimer: We have no position in Walgreens Boots (NASDAQ: WBA) nor Rite Aid Corporation (NYSE: RAD) and have not been compensated for this article.