By Ben Fox Rubin
Walgreen Co. (WAG) agreed to buy the retail drugstores and
specialty pharmacy business of Kerr Drug, a privately held regional
pharmacy chain, expanding Walgreen's operations in the North
Carolina market.
Though financial terms of the deal weren't disclosed, the
companies said Kerr Drug's retail drugstores and specialty pharmacy
business had total sales of $381 million in fiscal year 2012.
The acquisition, expected to close some time this year, is
structured as an asset transaction and includes Kerr Drug's 76
retail drugstores and its specialty pharmacy business. The
acquisition also includes a distribution center. Kerr Drug will
retain ownership of its long-term care pharmacy business.
Walgreen said it doesn't expect the transaction to have a
material impact on its per-share earnings in fiscal year 2014.
After closing, the acquired Kerr Drug retail drugstores will
continue to operate under their current brand in the near term.
Walgreen will decide over time on how to best integrate the Kerr
Drug businesses into its operations.
Walgreen and its rivals have seen a wave of generic drug
introductions over the past year weigh on revenue, while increasing
demand for those drugs produces a mixed effect on profits because
such copycat drugs carry higher margins.
The shift in consumers' drug purchases toward generics has led
pharmacy companies to take steps to improve their
performance--including a recent alliance by Walgreen and European
drug giant Alliance Boots GmbH (AB.YY) with drug wholesaler
AmerisourceBergen Corp. (ABC).
In June, Walgreen said its fiscal third-quarter earnings rose as
its pharmacy section led sales growth and increasing demand for
generic drugs helped buoy margins.
Shares closed Monday at $50.22. The stock is up 36% so far this
year.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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