Rite-Aid buys Eckerd
Rite-Aid, the #3 drugstore chain in the US, announced it will buy two other U.S. drugstore chains, Eckerd Drug and Brooks, from Canada's Jean Coutu group. Coutu is currently the #4 drugstore chain. The deal, involving cash and stock, is for around $3.4 billion US.
The deal will increase Rite-Aid's current total of 3,300 stores to around 4,100 stores. The Canadian Group will retail over 300 stores in Canada.
Jean Coutu bought 1,540 Eckerd stores and the brand name from J.C. Penny's in 2004 for around $2.2 billion when CVS bought 1,260 of the Eckerd stores. It may well be, that rite-aid, then undergoing management reorganization due to accounting irregularities, might have otherwise bought the Eckerd stores at that time.
Walgreen (5,400 stores) remains the #1 drug chain in the US, with over $42 billion in sales. CVS (around 6,100 stores) is second, with over $37 billion. Rite-Aid is far behind in third place, with $17 billion in gross income. The Jean Coutu acquisitions should get it closer.
All tree industry leaders continue to snap up drugstores. This summer, Walgreen announced it would acquire 76 stores in the Happy Harry's discount drug chain. CVS earlier this year bought over 700 Sav-On and Osco drugstores from Albertson's supermarket chain, in addition to the previously-acquired Eckerd stores.
CVS also went into the clinic business this year, buying MinuteClinic, the #1 operator of retail clinics with over 80 locations. CVS has already opened a number of clinics at its retail drugstore locations.
A New York Times story ("Rite Aid to Buy Brooks/Eckerd Drugstore Chain," 9/23/06) says that the Rite-Aid-Coutu deal "is expected to give the company more pricing power with drug makers and other health care providers." The story also notes the encroachments of general merchandisers like Target and Wal-Mart on the drug chains.
