Walgreens Boots Alliance Chief Executive Officer Stefano Pessina says he still believes in his company’s purchase of Rite Aid but can’t say whether the companies will extend the deal just three days from their agreed deadline to complete the merger.
The companies had agreed to close the planned $9.4 billion merger, which would create the largest drug store chain in the U.S. by number of stores, by Friday. But the deal hasn’t yet received antitrust approval from the Federal Trade Commission. Walgreens hasn’t made a filing confirming it has satisfied the agency’s information requests, which would then give the FTC another 30 days to decide whether to approve the deal or sue to stop it.
Extending the deadline “is a matter for the boards,” Pessina said in a meeting at Bloomberg’s New York office on Tuesday. “I cannot anticipate what they will do.” He said he had been instructed by his lawyers not to comment further on what might happen.
Walgreens likely would have to pay a $325 million breakup fee to Rite Aid if either side walks away.
Bloomberg News reported Friday that Walgreens’s plan to win antitrust clearance for its acquisition of Rite Aid hasn’t satisfied FTC officials. The agency’s lawyers reviewing the deal aren’t sold on Walgreens’s proposal to sell 865 drugstores to Fred’s Inc. to get approval, people familiar with the process have said.
Walgreens head of communications, Chuck Greener, said that his company hasn’t received “official notice” from the FTC on whether it would approve the merger in its current form. The agency has asked Fred’s for additional information, he said, declining to comment further.
Walgreens already postponed the deal deadline to Jan. 27 from Oct. 27 and said it expected the transaction to be completed early this year.
“The deal is still there,” Pessina said at the meeting. “The two companies have the right to walk away if they want, and the two boards will decide what to do.”
While either company can terminate the deal after the Jan. 27 deadline, they can also agree to extend the date again, even if they haven’t yet gained antitrust clearance, said Bloomberg Intelligence analyst Jennifer Rie.
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