Rite Aid shares go nuclear after report that Walgreens might buy the company

Rite Aid shares spiked by as much as 40% in trading on Tuesday after The Wall Street Journal reported that Walgreens was close to buying it.

Walgreens shares rose by about 4%.

Citing people familiar with the matter, The Journal said that a deal would value Rite Aid at close to $10 billion. The company’s current market cap is about $6 billion.

At current prices, the combined market caps of Walgreens and Rite Aid – assuming the company is valued at $10 billion in a deal – would total about $112 billion.

This would make the combined company worth slightly less than CVS, the US’s largest pharmacy chain, which has a market cap of about $116 billion.

Walgreens is scheduled to report quarterly results before the market opens Wednesday.

Here’s a chart showing the surge in Rite Aid shares:

source
Google Finance