Rite Aid Stock Plummets After Albertsons Merger Falls Through

Rite Aid-Albertsons merger terminated

The Rite Aid-Albertsons merger terminated after the two companies came to a mutual agreement to do so. Shareholders of both companies were anticipated to vote over the deal tonight.

Rite Aid-Albertsons Merger Terminated

The announcement yesterday is a blow to both the grocer and the pharmacy, which are both facing fierce competition in their respective industries. The original deal was announced back in February and was worth $24 billion.

The deal had faced serious pushback from a number of retail investors, including Highfields Capital Management. The issue? Critics felt that it provided Cerberus Capital Management, Albertsons’ private equity owner, a ‘vehicle’ to take Albertsons public without giving Rite Aid shareholders any reward.

Albertsons said Wednesday that it was unwilling to renegotiate the terms of the agreement.

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“After careful consideration of all information available to our board of directors through today, we were unwilling to change the terms of the merger,” Albertsons said in a statement.

Rite Aid’s CEO, John Standley, responded to Alberstons’ statement after the termination of the agreement was finalized, saying:

“While we believed in the merits of the combination with Albertsons, we have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company.”

Albertsons merged with Safeway back in 2015, and since the merger, the plans to take Albertsons public were sidelined. Rite Aid has also had its fair share of struggles, as it has stiff competition against CVS Health-Aetna and Walgreens.

Rite Aid Stock Nosedives (NYSE:RAD)

According to Yahoo Finance, shares of RAD have nosedived this morning following the announcement of the canceled merger. At press time, RAD is trading on the market at $1.55 a share, down $0.19 (-10.63%). Rite Aid Corporation stock is down -25.95% in its 52-week change.

While Rite Aid’s competitor CVS is currently trading just below the red, Walgreens is currently seeing gains in today’s market.

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Featured Image: Depositphotos/© wolterke