On October 27, 2015, Walgreens Boots Alliance (WBA) announced its plan to buy its rival Rite Aid (RAD) for $17.2 billion. VogelHood’s HHI™ analysis suggests the deal falls into Level 2 (171-500 HHI change) category, indicating moderate antitrust scrutiny. The MERGERANX™ score has increased from 0.85 on the deal announcement date to 0.88 as of the fourth quarter of 2016; political engagement statistics suggest regulatory approval.

MERGERANX™: Walgreens Boots Alliance (WBA) and Rite Aid (RAD)

      • VogelHood’s MERGERANX™ model examines correlations between policy engagement and transaction approval history to predict regulatory approval outcomes. In 2016, Rite Aid had a lobbying engagement of $1.15 million. Over the same period, Walgreens Boots had a lobbying engagement of $4.42 million.
      • Combined, Walgreens Boots and Rite Aid gave $137,255 at the state level and $1,296,439 at the federal level. Both the lobbying engagement and campaign engagement fall below the overall benchmarks but exceed the consumer peer group averages, generating a score 0.88. Statistically, this meets VogelHood’s MERGERANX™ thresholds for success.

Screen Shot 2017-02-28 at 12.03.28 PM

Reasons Why The Merger Will Be Approved

      • Statistics demonstrate that the companies are in a favorable position to receive approval from regulators. With a 0.88 MERGERANX™ score, regulators are likely to allow for the merger to consummate.
      • The FTC will take a wide view of competitive landscape, including supermarkets in their HHI calculations.

Key Risk Factors & Recent Developments

      • On February 15, 2017, it was reported that instead of the previously 865 stores of the divestitures plan, Walgreens said they would sell up to 1,200 stores to Fred’s. This is in accordance with VogelHood’s divestiture prediction on April 16, 2016; in the report Vogelhood predicted that “Walgreens and Rite Aid need to divest 1,125 stores in U.S. to receive antitrust approval”.
      • On February 27, 2017, according to the antitrust sources, the transaction is likely to receive antitrust approval very soon.


Screen Shot 2016-08-10 at 3.02.46 PMSamir N. Kapadia
Managing Director | VogelHood Group

More Insights

Company Coverage:
Lending Club (LC)

On December 11, 2014, VogelHood issued a note warning that Lending Club’s peer-to-peer lending business model will be subject to regulatory risk. Further analysis indicated that Lending Club made no effort to engage Washington to curb potential scrutiny into its business practices. On May 16, 2016, LC revealed it had received a Justice Department subpoena…

Learn more
Industry Trend:
How Alternative Data Sets are Reshaping How Investors Think

How Alternative Data Sets are Reshaping How Investors Think Information has always been the source of competitive advantage for investors, and the importance of gathering new information and quickly implementing it into investment decisions has been key. As new technologies and skill sets emerge, the potential to obtain even more information related to investments arises….

Learn more
Policy Outlook:
Agricultural Chemicals (DOW/DD, BAYN/MON, ChemChina/SYT)

POLITICAL OPPOSITION TO AGRI-CHEM DEALS NOT MEANINGFUL TO DATE; DEAL ON TRACK TO GAIN REGULATORY APPROVAL As with most deals of this magnitude (DOW/DD, BAYN/MON, ChemChina/SYT), there has been expected and routine political pushback from trade associations and some members of Congress, specifically regarding the agriculture chemicals mergers; however, we do believe that the risk…

Learn more