Walgreen to Buy USA Drug, Other Store Brands from LaFrance for $438 Million

by Arkansas Business Staff  on Thursday, Jul. 5, 2012 7:39 am  

Stephen LaFrance Sr., chairman and owner of Stephen L. LaFrance Holdings Inc.

Walgreen Co. of Deerfield, Ill., said Thursday that it is buying Stephen L. LaFrance Holdings Inc.'s regional drugstore chain, which includes USA Drug and Super D Drug stores.

The $438 million deal is subject to regulatory requirements and other closing conditions, and is expected to close around Sept. 1. The chain, operated under Stephen LaFrance Pharmacy Inc., includes 144 USA Drug, Super D Drug, May's Drug, Med-X and Drug Warehouse stores in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee.

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

The privately owned LaFrance chain recorded sales of $825 million in 2011, according to a Walgreens news release. That's lower than the $1.08 billion estimate by trade journal Chain Drug Review that Arkansas Business used to rank the company No. 7 on its 2012 list of the state's top private companies in May.

(More: An analyst on why Walgreen is buying stores from the LaFrance company.) 

At $438 million, the deal would rank among the biggest involving an Arkansas company in the last year and half. In 2011, only seven deals were larger. It also marks the third sale of company on Arkansas Business' largest private companies list this year. Crackerbox Food Stores of Hot Springs is being sold to Valero Retail Holdings of San Antonio, and Farm Bureau Mutual Insurance Co. of Arkansas Inc. is merging with three other insurance companies.

Walgreen said the deal is structured as a purchase of Stephen L. LaFrance Holdings Inc. stock. The Little Rock-based entity owns most of the business, but the deal also includes assets or stock "of certain affiliated companies or stores and other parts of the business that are not owned by that holding company."

"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," Stephen LaFrance, the holding company's chairman and owner, said in a news release.

Future for Stores, Jobs

Walgreen said the LaFrance drug stores will continue to operate under their brand names after the purchase closes and "decisions will be made over time regarding the best, most effective way to harmonize Walgreens and the acquired brands."

In a memo to employees, Joe Courtright, president and CEO of USA Drug, said "it is possible that decisions will be made about job reductions and store closings" and that the company would give advance notice and provide severance benefits.

"These individuals will also be eligible to be rehired as openings occur," Courtright said. "But remember, nothing will happen until the closing around Sept. 1, and we will maintain open channels of communication."

 

 

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