Walgreens may be eyeing Rite Aid as a possible takeover target, according to Susquehanna Financial Group; Rite Aid shares up by 7.3% in the wake of takeover speculation

LOS ANGELES , November 29, 2011 (press release) – Rite Aid Corp.'s stock price shot up 7.3% following Susquehanna Financial Group reported that Walgreen Co. may be eyeing Rite Aid as a potential takeover target, Bloomberg reported on Nov. 28.

According to Joseph Stauff, an analyst with Susquehanna Financial Group, buying Rite Aid at US$1.60 per share of stock would increase Walgreen’s next-year profits by approximately 5.8%.

Stauff estimated that Walgreen’s market share of nearly 28% of prescription sales would increase by an additional 7.1% with the acquisition of Rite Aid.

Stauff said that increasing amounts of “hostility” between companies that manage drug benefits for employers and drugstores regarding reimbursement rates could potentially lead retailers to consolidate.

Spokespeople for both Walgreen and Rite Aid declined to comment when asked about the takeover speculation.

The primary source of this article is Bloomberg, New York, New York, on Nov. 28, 2011.

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