Shares of pharmacy chain Rite Aid (NYSE:RAD) fell 15% as of 3:35 p.m. EDT on Friday. The drop is being caused by a Reuters report that raises more doubts about its pending takeover by Walgreens Boots Alliance (NASDAQ:WBA).
The Reuters article states that the Federal Trade Commission's staff is going to recommend that the agency sue to block its proposed acquisition by Walgreens. If true, that likely means the transaction is toast.
This isn't the first time investors have had to deal with rumors about the FTC, either. Just last month, an article was published in the New York Post that stated that the agency had sent out mandatory information requests to Walgreen's vendors and competitors. The articles suggested that the FTC's move was aimed at gathering information that could be used in a lawsuit to block the transaction. Today's Reuters article certainly gives credence to that New York Post report.
The added uncertainty surrounding the merger has left traders feeling uneasy, which is why Rite Aid's shares are tanking yet again.
As a reminder, Walgreen's official offer on the table is to buy out Rite Aid for at least $6.50 per share. With Rite Aid's shares currently trading for about $3 a piece, it's clear the market has no faith that this transaction will go through. Given these recent news reports, it's getting harder and harder to argue that the market's view is wrong.