“Big Mistake!”

Our contributor today sees things a little more black-and-white…

“If the U.S. government does anything that is not directly stated in the Constitution that thing is unconstitutional according to the 10th Amendment. The states were always intended to be the place where new things (computers, automobiles, and stock dividends) were regulated. 

“The reason we have so many problems in this country is because we have drifted so far from the Constitution. We have allowed the federal government to put in place these unconstitutional laws, much to the detriment of the country and the American people. Big mistake!”

We’re going to pivot away from the discussion on social engineering to talk about the item below.

Here’s my question for readers: Would you buy shares of “takeover bait”? Why or why not? (And if you have, let us know how it turned out.)

Your Rundown for Tuesday, November 12, 2019:

Takeover Tip Off

In what might be the biggest private takeover of a publicly-traded company in history, Walgreens (WBA) is reportedly interested in an offer from private equity firm KKR.

“Walgreens currently is valued at more than $55 billion,” says CNN Wire. “Any deal would probably be done at a premium to that price — and also include the assumption of the $16.8 billion in debt the retail and pharmacy giant has on its balance sheet.”

On the news yesterday, WBA shares rallied 6% — notwithstanding shares are flagging 10% this year, making Walgreens the third-worst performing Dow stock after Pfizer and 3M.

CNN Wire reports: “Walgreens… has struggled because of concerns that lower-priced generic drugs and a persistent decline in reimbursement rates for medications from state and federal government health care plans are weighing on profits.”

Not to mention the pressure’s on.

Earlier this year, the FDA warned the drugstore chain about dodgy sales practices: Selling tobacco products to minors.

And Amazon’s coming for Walgreen’s lunch with its online offering PillPack.

Add to that Costco, Walmart and Dollar General are stealing Walgreens “front of store” customer base.

All that to say, we can see why Walgreens would entertain KKR’s offer.

What’s a takeover mean for shareholders? According to Barron’s, it would take a share price of $75 – $80 to approve the deal. Shares are currently hovering at $62.

Market Rundown for Tues. Nov. 12, 2019

S&P 500 futures are up 8 points to 3,095.

Oil is up 47 cents to $57.33 for a barrel of West Texas crude.

Gold’s lost $2.50 per ounce to $1,454.60.

Bitcoin is down $27.52 to $8,731.39.

Have a good day. We’lll talk tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the publisher of Seven Figure Publishing. He is also the editor of The Rundown and has been with Agora Financial / Seven Figure Publishing since 2005. He's been covering technology and markets for over a decade.

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