Walgreens Boots Alliance interim CEO Stefano Pessina sent Rite Aid’s share price up last week when he hinted the newly enlarged drugstore retail company might want to take over its smaller rival.
Pessina is widely seen as helping orchestrate the merger between the two largest drugstore retailers in the U.S. and UK and has shaken things up in the new company's C-suite and on the board since.
The Deerfield, IL-based Walgreen Co. merged with UK drugstore chain Alliance Boots late last year, in a deal that made the country’s largest drugstore retailer even bigger.
Pessina has said that Walgreens Boots Alliance is looking to expand within the U.S., and many have speculated that that means acquiring a smaller rival in the process. While many hailed the idea, others don’t believe that Rite Aid is the right fit for either retailer.
"If Walgreens is in fact considering an acquisition now is the time," wrote analyst Brian Nichols, who writes at Motley Fool. "Rite Aid would be a terrific acquisition for Walgreens due to the extreme value presented in Rite Aid's stock. In all likelihood, Walgreens could buy Rite Aid for far less than a 100% premium, probably a 40% to 60% premium, which only adds to the logic in Walgreens making this move.”
But investor Brent A. Miller says that there are better suitors for Rite Aid, and that Walgreens would be better off finding ways to boost its e-commerce and be more strategic about changing or expanding its locations.