Rite Aid (RAD) management has struck a new deal to buy 2,186 stores for $5.18 billion, completely canceling out the minimum $6.50 promised land price that many investors had been waiting for.
In one of my last articles, I stated the low odds of FTC approval and warned investors of the amount of gamblers and speculators in this stock. It is important to maintain a level head and a clear focus when investing in stocks, rather than solely buying into the hype of market participants. I also challenged investors by pondering the possibility of a lower deal price given Rite Aid's poor negotiation skills. In this case, shareholders are not going to get paid at all.
The writing was on the wall here, first with CEO John Stanley's message to investors, followed by Capitol Forum's warning. Finally, yesterday Fred's (FRED) adopted a poison pill in anticipation of a merger failure. Many bullish investors dismissed these clues as their gambling mentality clouded their judgment.
