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Barrons Article:
Walgreens-Rite Aid Pact Can Work
Walgreens is well-positioned to improve operations at legacy Rite Aid stores and grow organically.
Sept. 21, 2017 10:50 a.m. ET
Credit Suisse
Walgreens Boots Alliance received regulatory clearance to purchase 1,932 stores, three distribution centers, along with related inventory from Rite Aid, pursuant to a new amended agreement.
Walgreens (ticker: WBA) will pay $4.375 billion for the assets with store purchases commencing in October with completion in spring 2018. Walgreens is tweaking its synergy target to $300 million-plus in annual synergies in four years (from $400 million), driven by procurement efficiencies and cost savings. Due to deal timing, the transaction is not expected to have a meaningful impact on fiscal 2018 earnings per share (“modest accretion” prior). While we are fine-tuning our Walgreens model for the restated deal size, timing, and synergy target, our fiscal 2018-2019 EPS estimates are unchanged.
Bottom-line, while the number of stores and synergy target have tempered (versus the prior purchase agreement), we remain encouraged by Walgreens’ $300 million-plus synergy target, along with Walgreens’ ability to operational challenges at legacy Rite Aid (RAD) stores. Recall, the prior purchase agreement included 2,186 stores for a purchase price of $5.175 billion and assumed $400 million in run-rate annual synergies. Moreover, enhanced clarity on the deal now likely removes an overhang on Walgreens’ shares stemming from prior Federal Trade Commission uncertainty. With this closure, focus can now shift to Walgreens’ execution at legacy Rite Aid stores, where we view it is well-positioned to improve operations and grow organically through leveraging new pharmacy network agreements.
We expect Rite Aid to change its primary drug wholesaler in a relatively timely fashion to AmerisourceBergen (ABC) from McKesson (MCK). McKesson’s current fiscal 2018 guidance includes a full fiscal year contribution from Rite Aid of about 20 cents-40 cents, which we now believe could be optimistic. For AmerisourceBergen, while we view today’s clarity as a positive, our fiscal 2018 EPS estimate moves to $6.05 (from $6.25) on the deal size and timing while also reflecting stepped expenses associated with DC investments among other initiatives in fiscal 2018, as it previously alluded to on its third-quarter call.
-- Erin Wilson Wright
-- Nicholas Feinman
-- Hong Tran
-- Gerard Campagna
Barro'ns article---I removed. Bad Link.
You got that right!
Yupper!
Currently 2.50 with 31MM shares traded.. So far you nailed it!
lolol....I love the reply reversal. You need to come work in my sales/marketing department!!
(Sorry for off-topic friends)-----And judges too, as well as, the ability to more easily impeach both. Judges should not be allowed to legislate from the bench.
Worse than that, unless she paid off officials big time, would rather, be hung or shot.
I agree the shorts hammered us yesterday. I think they shook out a bunch of longs who got frightened and were selling at the bid, trying to exit as fast as possible, plus capturing lower stop-loss orders.
Thanks for the good advice.
Sorry, but I just don't foresee huge swings in the PPS on a daily basis, unless something major happens, like an Amazon deal or something like it (financial group acquisition, etc.). And I am ok with that. I think it will get a lot more orderly now, with consolidation, and moves higher over time, thus this is why I think it is now a long term play. I have no proof yet, but I also think the short positions are significantly less, and the shorts that covered are now buying calls, while others are buying shares for longer term. But again, I do not see big pops. If it does, then I will cheer with you though, but we shall see.
Good article. Tide will now turn long. Outside of normal trading gyrations, consolidations, etc., it is my opinion the churns upward. Selling was definitely overdone yesterday.
For real!! Something to behold wasn't it? Told my son the same thing today...."Buying on Rumor; Selling on news".
Careful out there. You'll be toasting sometime for our success. Take care friend.
Little recovery at the end of the day. I added in the mid 2.40's today....from 2.44 to 2.47. Just a bunch of manipulation (shorts & longs....calls and puts). A lot of shaking out with long holders I believe too. I also think that a lot of shorts covered and bought back in long (or bought calls), especially since a deal has now been made, and the numbers, once crunched, will begin to show the true valuation of RAD going forward. It will now get much more orderly.
Look, everything seemed to happen all at the same time, all in one day. So take a deep breath, think about your strategy, stick with it, and see what happens. What a crazy day huh?
Peace brothers and sisters!
And a heck of a lot less debt. They will restructure what is left and have the assets to do so. I like the long term prospects.
Bounced off resistance at 2.26.
It is not tanking. Still well above resistance levels. Be calm. Some big players just doing their thing after getting themselves in a corner.
It would be helpful to get a statement from RAD today and their comments on this closing, what they will do with the funds, and what they plan to do moving forward. Guidance if you will.
Why not huh?
Added to my position at 2.47. Nice blocks.
No panic here. Just ebb and flow with some market volatility since the short position "had been" rather large. We will see consolidation and a settling out, then cooler heads prevailing after the numbers are worked out. I'm long term. Will buy on these dips. Lower resistance is 2.25 and 2.32.
Great stuff!
Saw my first Cubs game in 1964! Lived a block and a 1/2 from Wrigley. Great memories.
Just a thought. After a sale of stores, would RAD do a stock buyback and reduce the float and OS? That certainly would impact the share price.
Or longs? lolol
Haha...yup. And of course who didn't put a Nolan Ryan rookie card on their bike spokes!!
And "Penny Candy" was the best! Would get a whole bag of mixed and assorted for a quarter!
A lot of hearsay then, and by the following outlets, so there must be something to it, and all with the same story-"Walgreens to Tweak Deal to Gain US FTC Approval":
TheStreet
Yahoo Finance
Business Wire
Investors Business Daily
American City Business Journal
Accesswire
Reuters
Bloomberg
I like our chances!
Welcome aboard mate! Great board here. Just a couple shorty's showing up the last day or two (if that tells ya anything).
3 would be great today. Current afternoon lull, and some flippers for the day are exiting I believe. It will consolidate some then move up. Cheers!
Cover before you get caught with your shorts down.
Correction--I meant papertrade calls from my previous post. Nevertheless only papertrading calls.....argggg. Still much to learn.
It will be hard for me to watch on any given day since I own and run three business's, so tomorrow will be difficult to keep up with. However, I have stop-losses set and my GTC sells orders on part of my holdings starting at $5.00.
Great day today. Love the strength RAD is showing. Consolidates....moves up....consolidates again....moves up again. Wish I had loaded more, although I am happy with my stash of shares spread out in multiple accounts. Papertrade puts look great. Unfortunately only paper at this point. But hey my real shares are good too!
If some one sold 600K shares, then it stands to reason, someone bought 600K shares. That is not true that no one is buying. The trade proves it. Glass half full with some.....glass half empty with others! Who usually wins???
Well then, sounds like a good buying opportunity for me. Thanks for the investment advice.
Now those are good facts, less any mental anguish. Thanks!
Obsession or fixation regarding a stock like EXMT will do that. Not healthy in any way. Weather gain or loss, moving to the next play, and putting those things behind, is healthy investing, and healthy psychologically. I will play EXMT and follow my own advise heretofore.
Or to prove what they say. Otherwise, just seen as psychological manipulation trying to shake out longs, etc.