Walgreens expands presence in Mid-South with acquisition

DEERFIELD, Ill. — Walgreens will acquire 144 stores operating under USA Drug, Super D Drug, May's Drug, Med-X and Drug Warehouse banners in an agreement valued at approximately $438 million.

Walgreens will acquired the stores, which are located in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee as well as corporate offices, a distribution center located in Pine Bluff, Ark., and a wholesale and private-brand business from Stephen L. LaFrance Holdings and members of the LaFrance family. Walgreens said that the acquired drug stores will continue 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 acquisition expands our business in an important region of the country," Walgreens President and CEO Greg Wasson said. "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."

Stephen LaFrance, who serves as owner and chairman of Stephen L. LaFrance Holdings, said the decision to sell the chain — which recorded sales of $825 million in 2011 — was "not only because it is the premier drug store 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, 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. It is subject to satisfaction of regulatory requirements and other closing conditions, and is expected to close around Sept. 1. Walgreens currently expects that the transaction will not have a material impact on earnings per share in fiscal year 2012.