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Rite Aid Corporation Message Board

  • emanuilshvarts Jan 30, 2013 11:37 AM Flag


    Do we have on this board some gurus?
    Can you please explain how likely is RAD takover? I am surprised - big drugstore network, improving quarterly results, penny-level price - WHY NOBODY'S HUNGRY?

    Good Luck to everybody!

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    • IMO the only potential suitor for a takeover would be someone like Walmart. The strategy would be for them to increase their bargaining position with the insurers for script costs. The debt for a company like WM is nothing and the leverage of their expertise in front end merchandise would immediately improve the front end profitability. The downside is that WM has resisted getting into different business models outside their sweet spot. Now however they are opening the WM Express stores which are 35000 sq ft grocery and General Merchandise stores to combat the erosion from Dollar General (over 10,000 locations and growing).

      It is a stretch but I do not see WAG or CVS being interested in picking up RAD because too many stores overlap and would cause probably 40% or more closures, so besides eliminating competition what do they gain.

      Sentiment: Strong Buy

    • The ability to take over the company is limited due to their almost 7 billion in debt, the assets are just not worth taking the chance, instead the Walgreens and CVS chain will wait untill BK and then split it among themselves. The only company that may try to buy under current conditions is Walmart, they are looking for a company like this in new prototype, and have enough funds to take a loss of that volume, still highly unlikely. The problem for longs is that excutives are playing with numbers, and with express scripts resolution with Walgreens, Rad numbers will continue to go down. Take that one to the bank, hope you make money while you can.

      Sentiment: Sell

    • Too much debt

7.32+0.05(+0.69%)Jul 9 4:01 PMEDT

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