Author Topic: RAD - Rite Aid Corporation  (Read 7749 times)

JRM

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Re: RAD - Rite Aid Corporation
« Reply #20 on: March 14, 2018, 12:16:08 PM »
The upside scenario from here is that shareholders vote down the deal and remove current management.  There are no synergies with this deal.  It is a last ditch effort for Cerberus to cash out of Albertsons after loading it up with debt and for Standley to run the new company.

There is value in Rite Aid, but this deal definitely cuts the legs out.


HalfMeasure

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Re: RAD - Rite Aid Corporation
« Reply #21 on: March 14, 2018, 03:13:10 PM »
The upside scenario from here is that shareholders vote down the deal and remove current management.  There are no synergies with this deal.  It is a last ditch effort for Cerberus to cash out of Albertsons after loading it up with debt and for Standley to run the new company.

There is value in Rite Aid, but this deal definitely cuts the legs out.

Anyone have any opinions on the "tax benefit preservation plan"?

JRM

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Re: RAD - Rite Aid Corporation
« Reply #22 on: March 14, 2018, 03:50:52 PM »
The best that I can tell is it was a disguised poison pill designed to allow Standley time to establish a deal with Albertsons before a hostile takeover occurred.  This poison pill effectively gave management the option to dilute any shareholder that attempted to take a 5% or greater stake.  A hostile takeover could still occur, but it would be more difficult. 

It's pretty appalling that the deal Standley wanted to protect was a $2.50 reverse IPO merger with Albertsons.  It looks like to me like Albertsons is getting RiteAid for a steal, and the combined entity will likely value the combined RiteAid+Albertsons with a lower multiple than what the market should assign a standalone RiteAid this time next year with reduced debt and interest payments.  The worst part is RiteAid has to pay Albertsons a $60M breakup fee if the shareholders vote down the deal.  That would be worth it to me, though, to clean out the BOD and CEO positions.

This is a 2% position for me, so I'm following along mostly for entertainment value at this point.  I don't think sentiment can get much worse at this point.  Then again, I couldn't have been more wrong up to this point.
« Last Edit: March 14, 2018, 06:10:06 PM by JRM »