=Walgreens (WBA) reported earnings on Thur 29 June 2017 (b/o)

Rite Aid (RAD) and Walgreens (WBA) terminate merger, sign new agreement whereby Walgreens will acquire 2,186 stores, related distribution assets and inventory from Rite Aid for an all-cash purchase price of $5.175 bln; also reported earnings

Rite Aid (RAD) and Walgreens (WBA) terminate merger, sign new agreement whereby Walgreens will acquire 2,186 stores, related distribution assets and inventory from Rite Aid for an all-cash purchase price of $5.175 bln :

Rite Aid Corporation (RAD) announced that it has entered into an asset purchase agreement with Walgreens Boots Alliance, Inc. (WBA), whereby WBA will acquire 2,186 stores, related distribution assets and inventory from Rite Aid for an all-cash purchase price of $5.175 billion, on a cash-free, debt-free basis. Under the terms of the agreement, Rite Aid has the option to purchase generic drugs that are sourced through an affiliate of WBA at cost, substantially equivalent to Walgreens for a period of 10 years.

• The company also announced the immediate termination of the merger agreement, which was announced on October 27, 2015 and amended on January 29, 2017, under which WBA would have acquired all outstanding shares of Rite Aid. The decision to terminate the merger agreement follows feedback received from the Federal Trade Commission that led the company to believe that the parties would not have obtained FTC clearance to consummate the merger.
• In connection with the termination, WBA has agreed to pay Rite Aid a termination fee in the amount of $325 million in cash. In light of the termination of the merger agreement, the divestiture agreement with Fred's, Inc. (FRED) was also terminated, effective today.
• Rite Aid expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness, significantly reducing Rite Aid's leverage levels. Rite Aid also expects that the federal tax gain on the sale of the assets will be largely offset by its net operating loss carryforwards, resulting in a minimal cash tax payment on this transaction.

Walgreens Boot Alliance beats by $0.03, beats on revs; guides FY17 EPS above consensus; enters into new $5.18 bln deal for 2,186 Rite Aid (RAD) stores, terminating old deal with Fred's (FRED) (WBA) :

• Reports Q3 (May) earnings of $1.33 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $1.30; revenues rose 2.1% year/year to $30.12 bln vs the $29.72 bln Capital IQ Consensus. 
  • Retail Pharmacy USA had third quarter sales of $22.5 billion, an increase of 6.3% over the year-ago quarter. Sales in comparable stores increased 3.7% compared with the same quarter a year ago. Pharmacy sales, which accounted for 69.9% of the division's sales in the quarter, increased 10.3% compared with the year-ago quarter. This was primarily due to higher prescription volumes including mail and central specialty following the formation of AllianceRx Walgreens Prime. Comparable pharmacy sales increased 5.8%, primarily due to higher volume. Retail sales decreased 1.8% in the third quarter compared with the year-ago period, which includes the impact of the previously announced closure of certain e-commerce operations. Comparable retail sales were down 0.4% in the quarter, with declines in the consumables and general merchandise category and in the personal care category partially offset by growth in the health and wellness category and in the beauty category.
  • Retail Pharmacy International had third quarter sales of $2.8 billion, a decrease of 10.3% from the year-ago quarter mainly due to currency translation. Sales decreased 0.2% on a constant currency basis. On a constant currency basis, comparable store sales increased 0.2% compared with the year-ago quarter. Comparable pharmacy sales decreased 0.1% on a constant currency basis, primarily due to the negative impact of pharmacy funding in the UK. Comparable retail sales increased 0.4% on a constant currency basis, reflecting growth in the UK.
• Co issues upside guidance for FY17, sees EPS of $4.98-5.08 from $4.90-5.08, excluding non-recurring items, vs. $4.96 Capital IQ Consensus Estimate. 
• Walgreens Boots Alliance also announced today a new definitive agreement with Rite Aid (RAD) under which Walgreens Boots Alliance will purchase 2,186 stores, three distribution centers and related inventory from Rite Aid. The consideration for the transaction will be $5.175 billion in cash, the assumption by Walgreens Boots Alliance of the related real estate leases and the grant of an option to Rite Aid, exercisable through May 2019. This new agreement replaces the previous merger agreement with Rite Aid, announced in October 2015 and amended in January 2017, and the agreement to divest certain Rite Aid stores to Fred's (FRED) announced in December 2016. Both of these agreements have been terminated.
• On 28 June 2017 the company authorized a share repurchase program for up to $5 billion of the company's shares prior to the program's expiration on 31 August 2018.
• "Our results this quarter continued to meet our expectations as strategic partnerships brought more patients to our U.S. pharmacies. This led to our highest reported quarterly retail prescription market share in the U.S."