Facing a July 7 deadline from Walgreens Boots Alliance Inc. (WBA) - Get Report over the company's deal to buy Rite Aid Corp. (RAD) - Get Report , there is increasing expectation the Federal Trade Commission aims to resolve its antitrust review of the drugstore chain merger before the July 4 holiday.
With only two sitting members, both Chairman Maureen Ohlhausen and Democrat Terrell McSweeny must vote to challenge the deal before July 7 or Walgreens is free to consummate the deal, according to an agreement the companies have with the commission.
An FTC decision could come the week of June 19 or June 26.
If the FTC sues to block the deal, Walgreens has promised fight the agency in court.
Rite Aid shares closed around $3 Friday, down from this year's high of $8.60 on Jan. 18 as the market has generally perceived that the FTC is likely to ask a judge to kill the transaction.
There have been a number of signs that the the parties recognize the transaction faces long odds with regulators.
Fred's Inc. (FRED) the week of June 12 secured more than a half-billion dollar increase in the financing commitment from its lenders, a move likely taken to bolster the FTC's confidence that the Memphis-based drug store chain has the wherewithal to buy and operate more than 1,000 stores that will have to be divested from Rite Aid for Walgreens to win antitrust approval.
Buying the divested stores would more than triple Fred's size, and the FTC has seen several retail divestiture packages fail in recent because the buyers could not find success with the acquired assets. Asked whether the additional funding commitment was secured at the FTC's request, a Fred's spokesman declined to comment.
Fred's shares fell 1.5% to $10.35 early Tuesday afternoon. Walgreens' shares fell 1.4% to $78.71.
Fred's original financing agreement was disclosed on December 19, 2016 when the company was expected to acquire up to 865 Rite Aid stores. Fred's agreements now call for it to acquire up to 1,200 Rite Aid stores if the FTC orders Walgreens to spin them off.
A number of news reports have warned that the FTC appears increasingly likely to file a lawsuit challenging the Walgreens-Rite Aid deal.
Walgreens and Rite Aid executives have made disclosures indicating the companies' officials recognize the $15 billion deal's increasingly long odds.
And in an update on the merger to employees Monday, June 5, Rite Aid's chairman and CEO and the CEO of Rite Aid Stores wrote in a downcast tone on the deal's prospects. Also that day, Walgreensdeclined to issue additional debt securities to replace notes that had to be redeemed if the Rite Aid transaction did not close by the beginning of this month. Walgreens declined to issue new notes to pay for the deal.
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