Walgreens acquires USA Drug Pharmacy for $438 million

PRESS RELEASE

Walgreen Co. announced Thursday it will buy the USA Drug Pharmacy chain from Stephen L. LaFrance Holdings Inc. and members of the LaFrance family.

The acquisition, valued at $438 million, includes 144 stores that operate under the USA Drug, Super D Drug, May's Drug, Med-X and Drug Warehouse stores located in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee.

The deal also includes corporate offices, a distribution center located in Pine Bluff, Ark., and a wholesale and private brand business.

USA Drug recorded sales of $825 million in 2011.

"This acquisition expands our business in an important region of the country," said Greg Wasson, president and CEO of Walgreen. "It will provide significant new pharmacy business for us in this region while also enabling us to bring the Walgreens experience to many additional smaller communities where USA Drug has developed strong operational expertise."

The deal, subject to regulatory approval and other closing conditions, is expected to close around Sept. 1.

"What is now USA Drug began from a single store I opened in Pine Bluff, Ark., in 1968 and has grown to more than 140 stores in seven states," said Stephen L. LaFrance, chairman and owner of Stephen L. LaFrance Holdings Inc.

"We chose to sell our business to Walgreens not only because it is the premier drugstore company in our industry, but also because Walgreens will continue to provide our customers with the service and products they have come to expect.

The transaction is structured as a purchase of the stock of Stephen L. LaFrance Holdings Inc., which owns most of the acquired business, and also includes the purchase of assets or stock of certain affiliated companies or stores and other parts of the business that are not owned by that holding company.

The acquired drugstores will continue in the near term to operate under their current brand names after the transaction closes, and decisions will be made over time regarding the best, most effective way to harmonize Walgreens and the acquired brands.

This isn't the first deal between the two companies.

In 2010, USA Drug announced it was leaving the Memphis market, closing 17 Super D and Ike's stores here.

Walgreen bought the stores' prescription files and subsequently acquired Ike's stores on Union and Park. Both those locations still carry the Ike's name; their pharmacies are now integrated into the Walgreen system.