On October 27, 2015, Rite Aid Corp. ("Rite Aid") and Walgreens Boots Alliance, Inc. ("Walgreens") jointly announced an Agreement and Plan of Merger (the "Original Merger Agreement") pursuant to which Walgreens would acquire Rite Aid for $9.00 per share in cash (the "Original Merger" and the "Original Merger Consideration"). To convince the investing public that it would receive Federal Trade Commission ("FTC") approval to complete the Original Merger, Walgreens and Rite Aid had entered into an agreement with Fred's to sell 865 Rite Aid stores for $950 million in an all-cash transaction in order to complete the Original Merger (the "Fred's Asset Purchase Agreement"). On January 30, 2017, Rite Aid and Walgreens announced that they had entered into a new merger agreement (the "Revised Merger Agreement"), which cut the proposed consideration for Rite Aid stockholders from $9.00 per share to between $6.50 to $7.00 per share (the "Revised Merger"). On June 29, 2017, Rite Aid and Walgreens announced that they had terminated the Revised Merger Agreement. Following the termination of the Revised Merger Agreement, Walgreens terminated the Fred's Pharmacy asset purchase agreement.
The Complaint alleges that throughout the Class Period, the defendants made numerous materially false and misleading statements concerning the level of regulatory risk faced by the Original Merger and the Revised Merger which would ultimately cause the termination of the Fred's Asset Purchase Agreement. Specifically, the defendants made false and/or misleading statements: (i) downplaying or disputing contrary reports from journalists signaling regulatory turbulence in closing the merger; (ii) representing that inside knowledge of the FTC gave confidence that the deal would close.