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Walgreens, Rite Aid shares up on report FTC approval is more likely

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Shares of Walgreens Boots Alliance and Rite Aid jumped after a report said there are growing signs that the Federal Trade Commission will approve Walgreens' $17 billion acquisition of Rite Aid.

The report, published in the New York Post, cited unnamed sources, and said any approval would come with conditions.

The deal hopes to combine the first and third largest drugstore operators. Some have said that if it gets regulatory approval, it could further escalate the competition between Walgreens and CVS Health.

The regulator's chief concern has been the negotiating power the combined company will have with pharmacy benefit managers, who negotiate prices with drug manufacturers for pharmacies. However, the Post said the chief executive of the number one PBM, Express Scripts CEO Tim Wentworth, said Thursday that he supported the deal.

There will still be, post-merger, plenty of competition in retail, Wentworth told the Post. He added there are questions about whether any of the sizable pharmacy benefit managers will object.

Walgreen is expected to announce in a few days the beginning of a process to divest stores in regions where the chains may have too much overlap, a source close to the situation told the Post.

Shares of both Walgreens and Rite Aid both traded in heavier-than-usual volume Friday. Walgreens shares closed up 4.4 percent with nearly 10.8 million shares trading hands, compared with its 30-day average volume of 4.3 million.

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Rite Aid gained 3.4 percent on volume of nearly 43 million shares, more than double its 30-day average volume of 14.1 million shares.

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