This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Walgreen Wades into Antitrust Waters

OKLAHOMA CITY -- If Walgreen (WAG) pulls off a purchase of Longs Drug Stores (LDG), the company will suddenly control two-thirds of the drugstores in one of the country's hottest markets.

While some doubt federal regulators would allow that kind of market power, Longs has achieved it on its own. Rankings by Chain Drug Review showed that Longs operated 69% of the drugstores located in booming Honolulu. Walgreen has approached that dominance in several other markets, but has made no wave.

Nonetheless, rival CVS (CVS - Get Report) has been sounding alarms. When cautioning Longs against a deal with Walgreen, CVS specifically included Hawaii.

"If the FTC (Federal Trade Commission) concludes that a Walgreens/Longs transaction would have an anticompetitive effect in Hawaii," CVS stressed in a recent letter to Longs' board, "it would require divestiture of most -- if not all -- of the Longs Hawaiian stores."

Obviously, CVS hopes to win control of Longs' 521-drugstore chain for itself. CVS has an agreement to buy Longs for $71.50 a share, but the company faces resistance from Longs investors, who view the offer as too low, and then received a higher $75-a-share bid from Walgreen.

Walgreen hopes to secure hundreds of Long drugstores located in high-priced markets like California and Hawaii. If necessary, however, Walgreen will shed some of those drugstores as long as it doesn't have to sacrifice more than 40% of Longs' overall profit in the process.

Walgreen doubts that "anything even approaching (that) threshold" will be required.

Last week, the FTC requested detailed information about three different markets -- including Hawaii -- as it reviewed the competitive impact of Walgreens' proposed deal. While some saw this as a clear warning sign, the agency asked for data on mail-order traffic as well. Walgreens offers mail-order service, but it doesn't own one of the huge pharmacy-benefits managers that tend to dominate that business.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CVS $103.69 -0.13%
RAD $8.72 -0.46%
WAG $81.65 2.05%
AAPL $125.35 -0.81%
FB $82.86 -0.40%

Markets

DOW 17,891.26 -85.05 -0.47%
S&P 500 2,077.99 -8.25 -0.40%
NASDAQ 4,924.65 -22.7910 -0.46%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs