Rite Aid (NYSE:RAD) investors can't seem to catch a break these days. Shares of the drugstore operator took a 12.4% hit last week, held back by a published report that regulators are stepping up their scrutiny of the company's proposed purchase by Walgreens Boots Alliance (NASDAQ:WBA). Things didn't get any better a day later, when CNBC reported that Amazon.com (NASDAQ:AMZN) may be making a push into this niche.

Shares of Rite Aid have plummeted 58% so far in 2017. The next time you hear there are no risks in buying into a stock trading at a discount to its buyout premium, remember this tale. Acquisitions can fall apart, and fundamentals can crumble during the holding pattern.

A Rite Aid ad showing healthy food options.

Image source: Rite Aid.  

Prescribing a new medication

The New York Post reported on Tuesday that the Federal Trade Commission was sending out mandatory requests to Walgreen vendors and rivals, requesting additional information. Sources suggest that these demands could mean the regulators are collecting data to fend off a possible lawsuit if they block the deal, but at the very least it indicates that they're still not ready to approve the drugstore combination that was originally proposed 19 months ago.

It's been a test of resolve for Rite Aid shareholders who thought they would be getting cashed out at $9 a share when the deal -- initially valued at $17.2 billion -- was announced in late 2015. Things began to fall apart as regulators started to show signs of being reluctant to clear the transaction. Rite Aid and Walgreens Boots Alliance agreed to unload several stores to appease antitrust concerns, with Walgreens Boots Alliance paying less in return. The deal's original deadline to close expired in January, but it was extended through July, with Rite Aid accepting a lot less at the buyout's completion. The stock is trading a lot less than the $6.50-per-share floor of the revised deal, so the market has some serious doubts that the deal will close in the next two months. 

Then we get to Amazon's potential entry into this already competitive market. CNBC reported on Wednesday that the dot-com darling hired Mark Lyons from Premera Blue Cross to introduce an internal pharmacy benefits manager platform for its employees. Amazon's been known to test products and services with its own staff before rolling them out. Amazon's already selling medical supplies and equipment, and it's also reportedly hiring for its "professional" healthcare program.

Amazon is ruthless, and it's not afraid to take losses for the sake of gaining market share. Amazon could be disruptive to existing drugstore chains, and it's not a surprise to see publicly traded chains take a hit on the news. However, one can also argue that if Amazon does make a move here, it could ease regulatory concerns about the pairing of Walgreens Boots Alliance and Rite Aid.

The sell-off is overdone, even if the deal falls apart. Rite Aid isn't less than half the company it used to be when the year began. The stock is trading for a lot less than it was just before it agreed to be taken under Walgreens Boots Alliance's wing. Deal or no deal, it's hard to see the stock staying this cheap for long.  

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.