Walgreens, Rite Aid agree reduced merger price

Rite Aid shares tumbled in pre-market trade as it emerged that Walgreens Boots Alliance will now pay $6.50 to $7 a share for the company, down from the $9 a share announced back in 2015.

In a joint statement released on Monday, the companies said they have entered into an amendment and extension of their previously announced definitive merger agreement, which along with the price difference means Walgreens will be required to divest up to 1,200 Rite Aid stores and certain additional related assets if required to obtain regulatory approval.

The companies said the exact price per share will be determined based on the number of required store divestitures, with the price set at $7 per share if 1,000 stores or fewer are required for divestiture and $6.50 per share if 1,200 stores are required for divestiture. If the required divestitures fall between 1,000 and 1,200 stores, then there will be a pro-rata adjustment of the price per share.

The agreement to divest up to 1,200 Rite Aid stores represents an increase of up to 200 stores over the 1,000 stores that Walgreens Boots Alliance had agreed to divest under the original agreement.

Changes also include an extension to the end date from 27 January 2017 to 31 July 2017, to give the parties additional time to obtain regulatory approval.

At 1408 GMT, Rite Aid shares were down 16% to $5.79, while Walgreens shares were up 0.4% to $81.79.