It's a bad day for CVS Health Corp. (CVS) .
With questions swirling whether its combination would get approved by regulators, Walgreens Boots Alliance Inc. (WBA) and Rite Aid Corp. (RAD) struck a clever deal on Thursday. Walgreens will pay $5.175 billion to Rite Aid in cash and receive 2,186 stores in return. Walgreens will also pay Rite Aid a $325 million termination fee for its planned buyout of the company.
Walgreens will be an even bigger drug-selling beast, with more than 15,000 stores spanning 11 countries. As for Rite Aid, it will be left with about 2,300 stores once the deal closes in six months.
This is unlike anything I have ever seen before. Walgreens has essentially out-smarted the FTC in its attempt to dominate the pharmacy space. And if you are executives at CVS -- which is fresh off telling people that they shouldn't eat sugar or go tanning -- today is an awful start to the holiday weekend. It will be incredibly hard for CVS to win over the longer term in light of Walgreens' growing reach. Expect pressured profit margins and likely, earnings multiple compression.
In the end, as TheStreet's Mike Brown discusses, CVS may be forced to sell out to Amazon.com Inc. (AMZN) .
What's Hot On TheStreet
Happy birthday iPhone: Apple Inc.'s (AAPL) iPhone turns 10 years old today! What an amazing product Steve Jobs and his team created. But, as TheStreet's Natalie Walters points out, the next five years for Apple could be radically different. Sales could well be boosted by new, non-iPhone products such as smart glasses and autonomous car technologies. Walters also mentions that iPhone demand may peak in 2019.
Blue Apron falters: Blue Apron Holdings, Inc. (APRN) plans an initial public offering on Thursday seeking a valuation of about $2 billion. That's down significantly from a $3.2 billion valuation it had previously hoped to achieve. In the public sphere, the New York-based meal kit delivery service's IPO comes at an unsettling time, points out TheStreet's Ron Orol, as the markets begin to digest Amazon's mega $13.4 billion acquisition of Whole Foods Market, Inc. (WFM) . Moreover, investors have questioned Blue Apron's business model -- it hasn't turned a profit since 2012 due to rising marketing and distribution costs.
Blue Apron grew a farm overnight to celebrate its IPO pic.twitter.com/dJGDQfh84Q
— Brian Sozzi (@BrianSozzi) June 29, 2017
Hey Ford, this is cool: Ford Motor Co.'s (F) V8 Mustang GT isn't going to be the only pony car burning rubber soon. The automaker announced Thursday that it is going to make an electronic line-lock a standard feature on its upgraded 2018 Mustang powered by its turbocharged EcoBoost engine, a feature previously exclusive with the V8 GT. Essentially, the button allows one to smoke the tires easier.
Yours truly got to watch a new Mustang at Ford's Detroit HQ recently use the new feature. Suffice it to say, it looked very fun (see below photo).
Apple and Walgreens Boots Alliance are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL and WBA? Learn more now.
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