WASHINGTON -- Rite Aid Corp.'s $1.8 billion bid to buy Revco D. S. Inc. in history's biggest drugstore merger has hit a rough stretch of road at the Federal Trade Commission.
Rite Aid yesterday extended its Revco tender offer for the fourth time and said the FTC's continuing antitrust review caused the delay. The agency is looking at whether a merger that joins more than 4,800 drugstores would hurt competition and raise prices.
The FTC this week took the unusual step of naming trustees to sell several Rite Aid and Revco drugstores, after the companies had trouble disposing of pharmacies that the FTC ordered them to sell because of antitrust concerns about earlier mergers.
The FTC and Maryland state antitrust authorities also have been seeking information on whether Rite Aid was part of an alleged boycott against a prescription management company hired to buy drugs for state employees.
At the same time, analysts say the tender offer faces complications, because Revco's stock is trading for more than the price Rite Aid has offered.
Revco shares fell 12.5 cents yesterday to close at $28.875. That's still above the $27.50 Rite Aid has offered for the first 50.1 percent of Revco's outstanding shares.
The rest of the shares are scheduled to be converted into shares of Rite Aid stock under a formula that would equal at least $31.28 for each Revco share based on Rite Aid's current price of $34.125 a share.
"You'll be getting a better deal if you hold out," said Juan Noble, an analyst with Jackson Partners & Associates. "The Catch-22 is if you hold out, there is no deal."
About 23.6 million shares had been tendered by yesterday -- about two-thirds of the needed number. More than half the stock tendered so far belongs to Zell/Chilmark Fund LP, which owns almost 20 percent of Revco's outstanding shares.
Rite Aid says recent developments won't derail the Revco transaction. "We are confident that we will achieve our goal of acquiring Revco," said Rite Aid spokeswoman Suzanne Mead.