From the Financial Post:
Here’s a deal for investors: buy one drug store chain, get one free - or to be precise, 32% of one for free.
Shares in drug store group Jean Coutu Group (PJC) Inc. are so cheap, analysts said Friday, that at Thursday’s closing price of $10.69 for the subordinate voting shares, investors are assigning no value in Coutu’s 32% stake in U.S. drug store giant Rite Aid.
Coutu acquired the stake in Rite Aid last year as partial payment for its troubled 1,858—store Eckerd chain in the U.S., which it had acquired in 2004. In the past year, however, the stock price of Rite Aid has fallen by 66%, exacerbated by a 28% fall in the past week after Rite Aid reported soft December sales. Yesterday, Standard & Poor’s cut Rite Aid’s outlook to stable from negative, maintaining its “B” junk credit rating. ...more
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