Walgreens, Rite Aid Push Back Merger Deadline

Walgreens Boots Alliance Inc. and Rite Aid Corp. said Thursday they had extended the deadline to complete their merger as the companies work to obtain regulatory approval.

The move came as Walgreens posted an increase in profit in its fiscal fourth quarter as revenue edged higher.

The companies now expect the deal to close in early 2017 after extending the merger agreements deadline from October 27 to January 27. Last October, Walgreens agreed to buy Rite Aid for about $9.4 billion. In September, Walgreens said it would divest more of its stores than previously expected to help satisfy the Federal Trade Commission's review.

Walgreens said Thursday it remains actively engaged with the FTC and believes it will be able to divest between 500 and 1,000 stores, as required by the FTC, by the end of the year.

Shares of Rite Aid rose 3.2% to $6.87 in premarket trading.

The Deerfield, Ill., also said Thursday that overall sales at stores open at least a year fell 0.3% in the fourth quarter, due to lower sales of consumables and seasonal items, partially offset by sales in the health, wellness and beauty categories.

During the quarter, Walgreens reported a profit of $1.03 billion, or 95 cents a share, up from $26 million, or 2 cents a share, a year earlier. Excluding a swing in the value of warrants exercised to buy a stake in AmerisourceBergen Corp. and other items, per-share profit rose to $1.07 from 88 cents.

Revenue edged up 0.4% higher to $28.64 billion. Analysts projected 99 cents in adjusted earnings per share on $29.06 billion in sales, according to Thomson Reuters.

Walgreens said it expects $4.85 to $5.20 in adjusted earnings per share for its new fiscal year. Analysts expect $5.02, according to Thomson Reuters.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 08:35 ET (12:35 GMT)

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