Walgreens (WBA) Stock Slides, Rite Aid Deal May Face Regulatory Scrutiny, Jim Cramer's Take - TheStreet

NEW YORK (TheStreet) -- Walgreens Boots Alliance (WBA) - Get Report stock is down 2.11% to $93.15 in pre-market trading on Wednesday after the company agreed to acquire Rite Aid Corp. (RAD) in a $17.2 billion deal, including debt.

The company agreed to pay $9 in cash per each Rite Aid share, representing a 48% premium over the closing price on Monday before the deal was finalized, the companies said in a statement.

The deal is expected to close in the second half of 2016.

TheStreet's Jim Cramer, portfolio manager of the Action Alerts PLUS charitable trust portfolio, has this to say about the acquisition: "I don't think this deal will be allowed by the Justice Department but it sure makes sense from the point of view of Walgreen's. I think it puts pressure on Express Scripts (ESRX) to do a deal, too."

This morning, Walgreens Boots Alliance reported better than expected fiscal 2015 fourth quarter earnings and revenue, and mixed full year financial results.

The company posted earnings of 88 cents per share on revenue of $28.52 billion for the quarter ended August 31, while analysts had estimated earnings of 81 cents per share on $28.45 billion.

U.S. same store sales for Walgreens and Duane Reade locations rose 6.5%, while total sales increased 4.7% year-over-year to $19.9 billion.

For the fiscal year, Walgreens Boots Alliance reported earnings of $3.88 per share, beating estimates of $3.80 per share.

Fiscal 2015 revenue increased 35.4% to $103.44 billion, but missed estimates of $103.47 billion.

Separately, TheStreet Ratings team rates WALGREENS BOOTS ALLIANCE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate WALGREENS BOOTS ALLIANCE INC (WBA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

You can view the full analysis from the report here: WBA

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