Rite Aid Corp (RADCQ)

[Prudent Capitalist]

They will likely be worth a bit more than that when the deal closes, so long as there is not a serious deterioration in the fundamentals of either of the merger partners. The ceiling on the value to RAD holders here appears to be in the $2.30 - $2.50 range, and it also depends on which option you choose, either 1.079 shares of Albertson's for every 10 shares of RAD, or $1.83 in cash and 1 share of Albertson's for every 10 shares of RAD. And, it depends on where Albertson's shares trade following closing of the deal.

Many feel that the best option for RAD holders is to take all stock in the hope that the combined company will benefit from larger scale and synergies following the merger, and thus produce more value long term. Which option RAD holders take also will depend on each holder's tax basis in the shares and whether they want to convert any of it to cash for purposes of a capital gain or loss in the particular tax year when the deal closes.