UBS Securities' analyst Neil Currie thinks that once Walgreens has had the opportunity to complete its purchase of Duane Reade, it might turn its attention to taking over some or all of Rite Aid's 4,800 stores. Of course, CVS and Walmart might have something similar in mind and perhaps more than one of these parties could buy up part of the drugstore chain.
Rite Aid is valuable to others in the pharmacy business, according to Mr. Currie, because it "is the last remaining major drugstore asset in the U.S., with meaningful exposure to dense urban markets."
Any of the three chains would benefit from a deal with Rite Aid, Mr. Currie wrote.
"We believe potential suitors for stores within the Rite Aid portfolio could include CVS, especially in the Pacific Northwest and Mountain regions; Walgreens in certain urban markets; and Walmart, given our view that Walmart has significant potential to grow in urban markets, is looking more closely at the economics of a smaller food/drug footprint and appears to have wider healthcare ambitions."
Discussion Questions: How likely do you think all or parts of Rite Aid will be sold? What chain(s) would benefit most from acquiring part or all of Rite Aid?
How likely do you think it is that Rite Aid will be a takeover target in the near future?