Stock Futures Mixed as Walgreens, Rite Aid Strike a New Deal
Stock futures contracts were mixed Thursday, June 29 after Walgreens Boots Alliance Inc. (AMB) and Rite Aid Corp. (RAD) canceled a merger agreement, but concluded a new agreement.
The S & P 500 futures were up 0.12%, Dow Jones Industrial Average futures increased 0.08% and Nasdaq futures were down 0.14%.
Under the new agreement, Walgreens will pay $ 5.7575 billion to Rite Aid and receive cash at 2186 stores. Walgreens also paid Rite Aid a cancellation fee of $ 325 million to cancel the operation.
Walgreens is an even bigger drug-selling beast, with more than 15,000 stores in 11 countries. Walgreens expects synergies of $ 400 million in transaction and new outlets to increase its adjusted earnings in the first year of the closing operation. As for Rite Aid, it will have about 2,300 stores once the transaction has completed in six months.
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The initial merger agreement signed in 2015 was canceled. The agreement was scrutinized by the competition authorities and doubts were raised that the agreement would be approved. The initial agreement was first announced in October 2015, with modified conditions in January 2017.
Inc. Fred’s stock (FRED) crushed more than 25% in the pre-market market, as it will be excluded from the purchase of 865 stores, it is expected the company combined to produce.
In addition, Walgreens has exceeded sales results and estimates during the second fiscal quarter. The pharmaceutical chain earned $ 1.33 per share, 3 cents above the consensus.
Sales of 30.1 billion estimates exceeded 29.7 billion. The company now provides earnings guidance of $ 4.98 to $ 5.08 per share for an increase in the amount of aid of $ 4.90.
Crude prices boosted earnings Wednesday, June 28, West Texas Intermediate rose 1.1% per day, even after an increase in domestic reserves. The Energy Information Administration reported an accumulation of 100,000 barrels in crude inventories in the last week, while gasoline and distillate stocks fell.
Crude has been under pressure recently because of worries about world overproduction and persistently high production. Closed Wednesday, June 21, reached its lowest level in 10 months.
West Texas Intermediate crude rose 1% to $ 45.19 a barrel on Thursday.
On the economic calendar, the final print on GDP growth in the first quarter Thursday and weekly jobless claims will be announced at 8:30 pm ET.
Among notary profits include HB Fuller Company (FUL), Pier Imports Inc. (PIR), Worthington Industries Inc. (WOR), McCormick & Co. Inc. (MKC), Lindsay Corp. (LNN), Constellation Brands Inc. (STZ), Acuity Brands Inc (AYI), ConAgra Brands Inc. (CAG) and Greenbrier Cos. (GBX).
The company’s office supplies Staples Inc. (SPL) has agreed to be acquired by private firm Sycamore Partners for $ 10.25 per share, or $ 6.9 billion. The sale comes a year after a federal judge, citing antitrust grounds, blocked the $ 6.3 billion merger proposed by Staples with the Office Depot Inc. (PAO). It is expected that the agreement will be completed by the end of the year.
This is the last week of the second quarter and benchmarks should post solid earnings. Sound fundamentals and a positive earnings season boosted the markets in the last three months, despite the volatility occurred at multi-year levels.
The Dow is on track to finish nearly 4% higher in the quarter, adding to 4.5% growth in the first quarter. Similarly, the S & P 500 is on track to end up with gains of about 3%, slowing the 5.5% increase seen in the first three months of the year.