Walgreens Boots Alliance Inc (NASDAQ:WBA) Weighs Risky FTC Gambit In Rite Aid Corporation (NYSE:RAD) Merger


Walgreens Boots Alliance Inc (NASDAQ:WBA) is weighing a delicate and risky move to compel the Federal Trade Commission to approve the merger with rival Rite Aid Corporation (NYSE:RAD) for $9.7 billion.

Walgreens first announced the purchase of Rite Aid back in 2015, a merger that would create the country's largest drug store chain.

Tired of repeated delays in securing the approval for the merger, which if effected will lead to the country’s biggest drugstore chain, Walgreens is weighing in on declaring it has “certified compliance”. The declaration would imply that, according to Walgreens, has provided all of the information required by regulators to make a determination. The decision means the FTC will have 30 days to finish reviewing the merger and make a determination to bring a quick completion of the review process that has been delayed since 2015. The decision would also amount to a strategy; i.e. in case of a vote on the application, the FTC may unanimously approve the application.

The FTC is not fully constituted with only two out of the five-member panel currently available. Edith Ramirez, a Democrat resigned as chairwoman this February. Only democrat, Terrell McSweeny, and Maureen Ohlhausen, a Republican are available on FTC’s panel.

The two commissioners are unlikely to give a unanimous vote needed to block the merger.

“Alarm.com won FTC clearance in the last month in a controversial deal to buy rival Icontrol that gives the companies a 70 percent market share in the remote services for dealer-installed security systems space. They certified compliance and time elapsed without a suit.”

A competitor, Honeywell International Inc. (NYSE:HON), on February 22 to stop the merger sued in a New Jersey-based federal court. The court is yet to decide on the case.

Meanwhile Walgreen is increasing getting worried about the Rite Aid petition. For the second time, staff at FTC expressed concerns about the plan by Walgreen to sell some of its stores to Fred’s Pharmacy. Walgreen is taking the move to quell antitrust concerns.

The merger which was announced in 2015 was stopped from taking effect just a few days from regulatory clearance. If cleared, the merger will become the largest pharmacy chain in U.S.
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