Chain Store Age reported news that the Federal Trade Commission’s (FTC) staff were prepared to recommend that the agency file a lawsuit to stop the deal. A source said that FTC staff has asked companies and groups concerned about the deal for depositions and affidavits that could be used in a lawsuit to stop it.
Walgreens and Rite Aid have been waiting for FTC approval of the acquisition since Walgreens made its initial offer in October 2015. Rite Aid’s share price dropped as much as 16.7 percent after the report, while Walgreen’s shares saw little change.
While Walgreens has 8,175 stores and Rite Aid has about 4,600, CVS Health Corp is the nation’s largest drugstore chain with more than 9,600 stores. Walgreens has indicated it may sell as many as 1,200 stores to smaller chain Fred’s as a way to resolve antitrust problems under the proposed merger. The deal would help Walgreens widen its U.S. footprint and negotiate for lower drug costs.
David Balto, a former FTC official, said the agency would have a “compelling case” if it sued to stop the deal and noted that the agency had stopped other big transactions, including a bid by Staples, Inc. to buy Office Depot, Inc., which was scrapped last year.
Walgreens, Rite Aid and the FTC all declined comment.