Author Topic: RAD - Rite Aid Corporation  (Read 7576 times)

valuedontlie

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Re: RAD - Rite Aid Corporation
« Reply #10 on: June 30, 2017, 06:40:44 AM »
RayJay came out with SOTP value of $2.04 for post-close RAD... their approach seems silly to me...

They used P/EBITDA of 8.5x for PBM side of business and $200k value per store for retail (or 1.1x P/EBITDA for that side of business)...


Zorrofan

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Re: RAD - Rite Aid Corporation
« Reply #11 on: June 30, 2017, 07:21:30 AM »
Based on the huge volume yesterday and today someone seems to see value at this point.  Could a PE firm be buying in? It  would seem unlikely at least to me that its just retail investors buying, they are the ones likely panic selling at this point.

cheers
Zorro

Jurgis

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Re: RAD - Rite Aid Corporation
« Reply #12 on: June 30, 2017, 07:37:34 AM »
Based on the huge volume yesterday and today someone seems to see value at this point.  Could a PE firm be buying in? It  would seem unlikely at least to me that its just retail investors buying, they are the ones likely panic selling at this point.

cheers
Zorro

I thought that the buying was from AMZN takeover/whatever rumor, no?

I have to admit I only saw this somewhere fleetingly though.
"Before you can be rich, you must be poor." - Nef Anyo
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mcliu

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Re: RAD - Rite Aid Corporation
« Reply #13 on: June 30, 2017, 09:30:48 AM »
RiteAid does seem ripe for an activist to shake things up..

JRM

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Re: RAD - Rite Aid Corporation
« Reply #14 on: August 26, 2017, 11:39:16 AM »
I'm surprised there's not more discussion about the current situation for RAD.  Could somebody tell me what I'm missing?

It looks to me like there was a lot of forced selling after the WAG deal was terminated.  Also, I'm guessing many institutional funds aren't allowed to own RAD as it is trading for less than $5.

This looks like a situation where the market is under-estimating the chance that the new WAG deal goes through (recency bias?).  If the deal goes through this is easily a double.  Because WAG exited the deal prior to an FTC decision, they probably knew they deal was unlikely to go through.  My guess is WAG management was in discussions with the FTC and should have a pretty good feeling for what they would be willing to accept.  I don't think WAG would have pre-maturely killed the deal only to follow it up with a modified deal if they weren't confident that it would go through (yes, I know they already modified it once).

Even if the deal doesn't go through RiteAid has few options other than to sell stores and de-lever its balance sheet.  They've been in liquidation mode for the past 2+ years, so either they get new management or they continue to try to sell off the business.

The PBM business was purchased for ~$2B, and sales are up 50% since they purchased it.  I would think the PBM is worth at least what they paid for it (unless they become a distressed seller).  At the current share price I'm basically buying the PBM and getting the rest of the business for free (almost). 

The downside is obviously bankruptcy, but I think the market is over-estimating this outcome.

JRM

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Re: RAD - Rite Aid Corporation
« Reply #15 on: September 19, 2017, 08:40:30 AM »
Interesting (but not surprising) market reaction today on the FTC approval of the modified Walgreens deal to purchase 1,932 stores for $4.375B.  This was a reduction in store count and price paid per store.  However, Rite Aid still has the option for the 10-year generics purchase agreement through Walgreens, they still have Envision, and they will still be able to pay off a lot of debt.

I think I may sell some puts.  Ok, I'm done talking to myself.

JRM

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Re: RAD - Rite Aid Corporation
« Reply #16 on: February 20, 2018, 03:36:45 AM »

HalfMeasure

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Re: RAD - Rite Aid Corporation
« Reply #17 on: February 20, 2018, 06:45:10 AM »
https://www.cnbc.com/2018/02/20/albertsons-to-acquire-rite-aid-in-defense-move-against-amazon.html

Looks like this one may work out sooner than I expected.

How do you feel about the consideration offered in the transaction?

JRM

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Re: RAD - Rite Aid Corporation
« Reply #18 on: February 20, 2018, 11:40:09 AM »
The offer, as far as I can tell, is in the money given my cost basis.  However, I don't very much like the deal and I don't want shares of Albertsons.  It looks like Cerebus is using this as an opportunity to cash out before Amazon and Wal-Mart take them out.

Not that my opinion matters, but I thought a bid would come in around $3.  A $2.49-$2.50 bid for cash+shares or all shares seems pretty low ball.  I can't believe Standley instituted a poison pill and thinks this is a good offer.

Aqul

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Re: RAD - Rite Aid Corporation
« Reply #19 on: March 14, 2018, 11:37:39 AM »
Anyone interested at these levels? If they hit anywhere near those synergy targets, you are creating the company at a dirt cheap price...