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Now what?

After officially cancelling, and retooling, its merger with Walgreens Boots Alliance (WBA) - Get Walgreens Boots Alliance Inc Report it's possible that Rite Aid Corp. (RAD) - Get Rite Aid Corporation Report could be a target for Inc. (AMZN) - Get, Inc. Report  .

Sure, Jeff Bezos' e-commerce conglomerate is plenty busy working to complete, and then digest, its $13.7 billion acquisition of Whole Foods Market (WFM) , but anyone who has followed the company knows that it has ambitions to enter all facets of retail, and frankly all facets of people's lives.

With recent reports that the company its looking to break into the pharmacy space one Wall Street firm recently suggested that Rite Aid, or even a pharmacy benefit manager (PBM) could be next in the company's crosshairs.

"Following the [Whole Foods] acquisition, we estimate [Amazon] will still have a net cash balance of [about $100 million to $200 million] and a negative leverage ratio," wrote David Larsen of Leerink Partners on Tuesday, June 27. "This leaves room for an additional debt-funded deal which could be either a pharmacy chain such as [Rite Aid] (assuming its merger with [Walgreens] is blocked) or a PBM if the company chose not to expand its internal offering."

The analyst suggested that Express Scripts Holding Co.  (ESRX) could be a target for Amazon as well. Express Scripts has a $38 billion market capitalization and $13 billion in debt according to FactSet, so a deal wouldn't come cheap for Amazon. 

"Assuming a 30% premium, we estimate that such a NewCo of [Amazon, Whole Foods and Express Scripts] would have a leverage ratio of [about 1.8 times] which is reasonable," Larsen wrote. "We note that [Amazon] alone generates enough [free cash flow] to handle an additional $1.5 billion of interest expense assuming 3% debt."

While an acquisition of Express Scripts is a possibility, it is also possible that Amazon could simply partner with Express Scripts and its pharmacy partner CVS Health Corp.  (CVS) - Get CVS Health Corporation Report to become a virtual store-front for the two.

As part of the companies' new deal, Walgreens will pay $5.175 billion to Rite-Aid in cash and receive 2,186 stores in return. Walgreens will also pay Rite-Aid a $325 million termination fee for its planned buyout of the company.

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In connection with its previous transaction, Rite Aid and Walgreens had agreed to sell about 1,200 stores to Memphis, Tenn.-based Fred's Inc. undefined as a remedy to FTC anti-trust/anti-competitive concerns. That deal has been cancelled. 

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Fred's said on Wednesday it is adopting a short-term shareholder rights plan, also known as a "poison pill," following increased trading volatility related to its participation in the transaction.

Needham analyst Kevin Caliendo had speculated in a note on Wednesday, June 28, that should the merger be cancelled another deal could takes its place.

Fred's had secured more than a half-billion dollar increase in the financing commitment from its lenders to buy and operate more than 1,000 stores that will have to be divested from the Rite Aid-Walgreens deal.

Shares of Fred's fell 16% to $7.74 by Monday's close. Shares of Walgreens fell 0.2% to $78.13. Rite-Aid was at $2.70, down 8.5%.

For Amazon, it is no secret that the Seattle company would like to get more into healthcare.

Recent press reports say the company held a meeting to discuss entering the pharmacy business, and the company is looking to hire a new manager to lead the process. 

Leerink suggests that the company may also consider building out its own internal PBM service for its 350,000 employees.

"If successful, this theoretically could be scaled into the PBM marketplace," Larsen wrote.

Walgreens Boots Alliance is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells WBA? Learn more now.

Editor's pick: This story was originally published on June 27 and has been updated to reflect the new Walgreens/Rite Aid deal.

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