Walgreens Expanding Through 144-Store Acquisition

DEERFIELD, Ill. -- Walgreen Co. is growing its footprint through the acquisition of a regional drugstore chain in the mid-South. The deal gives the drugstore giant 144 more stores in Arkansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee.

The acquired drugstores currently operate under the USA Drug, Super D Drug, May's Drug, Med-Z and Drug Warehouse banners. The sellers are Stephen L. LaFrance Holdings Inc. and members of the LaFrance family.

Also included in the deal are corporate offices, a distribution center in Pine Bluff, Ark., and a wholesale and private brand business, for a total of approximately $438 million subject to adjustment in certain circumstances. The USA Drug chain recorded sales of $825 million in 2011, according to a Walgreen Co. release.

"This acquisition expands our business in an important region of the country," said Walgreens President and CEO Greg Wasson. "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 transaction, which is subject to completion of regulatory requirements and other closing conditions, is slated to close around Sept. 1. Walgreens doesn’t expect it to have a material impact on earnings in fiscal year 2012.

"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, the company noted.