REUTERS: Drugstore chain Walgreens Boots Alliance Inc said its deal to buy smaller rival Rite Aid Corp would now take six months longer to close and reduced its offer price, as it expects to divest more stores to gain regulatory approval.
Rite Aid shares fell as much as 17.8 percent to US$5.70 on Monday, while Walgreens shares rose slightly to US$82.23, after the companies pushed the deal close to July 31 from Jan. 27.
The companies said on Monday they agreed to reduce the offer price to US$6.50-US$7.00 per share, valuing Rite Aid at US$6.84 billion-US$7.37 billion.
Walgreens had initially offered US$9 per share, valuing the company at US$9.40 billion, in October 2015. (http://reut.rs/2kFULFa)
Under the revised deal, Walgreens would now need to divest up to 1,200 Rite Aid stores, 200 more than earlier agreed.
"The one remaining uncertainty is who buys the incremental boxes as it is not clear to us that FRED has the financing capacity to do so," Evercore ISI analyst Ross Muken said in a note.
Walgreens had struck a deal in December to sell 865 stores to Fred's Inc , but a Bloomberg report last week said the U.S. antitrust regulator was not satisfied with the plan.
Deerfield, Illinois-based Walgreens also cut its 2017 adjusted earnings forecast to US$4.90-US$5.08 per share, from its previous US$4.85-US$5.20 per share. (http://bit.ly/2kjpNFu)
Fred's shares rose as much as 7.9 percent to US$15.22.
Walgreens said on Monday it would pay US$7.00 per share if regulators required 1,000 stores or fewer to be divested and US$6.50 per share for 1,200 stores.
For divestitures between 1,000-1,200 stores, the offer price will be adjusted on a pro-rata basis, Walgreens said in a statement on Monday.
The six-month delay would be the second time Walgreens has pushed the deal closure date.
Walgreens Chief Executive Stefano Pessina said last week that the company was pressing on to close the deal with Rite Aid and was actively engaged in talks with the U.S. Federal Trade Commission (FTC).
Walgreens has 13,200 stores, nearly 60 percent of which are in the United States, while Rite Aid has 4,570 stores.
(Reporting by Siddharth Cavale, Ankur Banerjee and Gayathree Ganesan in Bengaluru; Editing by Shounak Dasgupta)