First off, let me say that I'd be shocked if Walgreens ever made a bid to acquire Rite Aid. I'd be even more amazed if a deal to combine the two companies was ever approved by regulators.
So, let's take a step back. As analysts are want to do, Edward Kelly of Credit Suisse put it out there that a deal between the drugstore chains might make sense. After all, Walgreens took a hit when it failed to reach an agreement with Express Scripts and now needs to make up some of its shortfall.
Rite Aid, for its part, probably would want such a deal. The drugstore chain has a lot of stores and more than its share of under-performers. It has struggled for years to achieve profitability and carries a lot of debt on its books — much more than Walgreens, although that debt would become Walgreens' if a deal was reached.
On the plus side for a merger, the combined companies would have increased purchasing power and the means to realize savings by eliminating duplicate jobs and redundant facilities. Mr. Kelly, according to a New York Times report, puts the savings at somewhere between $400 million and $650 million.
Mr. Kelly, as Seeking Alpha reports, believes that the combined company would only need to divest around three percent of its more than 12,500 stores to gain approval from regulators.