Rite Aid 2016 Annual Report Download - page 26

that results in, at closing, Rite Aid’s last twelve (12) months Adjusted EBITDA (as such term is
defined in the Merger Agreement), being less than $1.075 billion determined as of the end of the last
fiscal month ended prior to closing for which internal financial statements of Rite Aid are available.
While we believe we will receive the requisite approvals, there can be no assurance that these and
other conditions to closing will be satisfied at all or satisfied on the proposed terms and schedules as
contemplated by the parties. Satisfaction of the closing conditions may delay the completion of the
Merger, and if certain closing conditions are not satisfied prior to the end date specified in the Merger
Agreement, the parties will not be obligated to complete the Merger.
If the Merger is not completed for any reason, we will have incurred substantial expenses. We have
incurred substantial legal, accounting and financial advisory fees that are payable by us whether or not
the Merger is completed, and our management has devoted considerable time and effort in connection
with the pending Merger. If the Merger Agreement is terminated under certain limited circumstances,
the Merger Agreement may require us to pay WBA a termination fee of $325 million. For these and
other reasons, a failed merger could materially adversely affect our business, operating results or
financial condition. In addition, the trading price of our common stock could be adversely affected to
the extent that the current price reflects an assumption that the Merger will be completed.
The pendency of the Merger may cause disruptions in our business, which could have an adverse effect on our
business, financial condition or results of operations.
The pendency of the Merger could cause disruptions in and create uncertainty regarding our
business, which could have an adverse effect on our financial condition and results of operations,
regardless of whether the Merger is completed. These risks, which could be exacerbated by a delay in
the completion of the Merger, include the following:
• certain vendors may change their programs or processes which might adversely affect the supply
or cost of the products, which then might adversely affect our stores sales or gross profit;
• negotiations with third party payors might be adversely affected which then might adversely
affect our stores sales or gross profit;
• our current and prospective associates may experience uncertainty about their future roles with
WBA, which might adversely affect our ability to attract and retain key personnel;
• key management and other employees may be difficult to retain or may become distracted from
day-to-day operations because matters related to the Merger may require substantial
commitments of their time and resources, which could adversely affect our operations and
financial results;
• our current and prospective customers may experience uncertainty about the ability of our stores
to meet their needs, which might cause customers to make purchases or fill their prescriptions
elsewhere;
• our ability to pursue alternative business opportunities, including strategic acquisitions, is limited
by the terms of the Merger Agreement. If the Merger is not completed for any reason, there can
be no assurance that any other transaction acceptable to us will be offered or that our business,
prospects or results of operations will not be adversely affected;
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