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 (NYSE: %%WAG%%) says it is the nation's largest drugstore chain, with fiscal 2011 sales of $72 billion. The company operates 7,890 drugstores in all 50 states, the District of Columbia and Puerto Rico.

"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." 

Slumping Sales

The Walgreen purchase of the LaFrance stores comes as the pharmacy giant battles a sales slump driven largely by Walgreen's split with pharmacy benefits manager Express Scripts.

On Thursday, Walgreen reported that revenue from stores open at least a year sank 10 percent last month as generic drug sales and the Express Scripts split continued to hurt business. Walgreen had filled prescriptions for Express Scripts, but their contract expired several months ago.

Last month, Walgreen announced it would pay $6.7 billion for a stake in European health and beauty retailer Alliance Boots.

LaFrance Pharmacy

LaFrance, a Pine Bluff pharmacist, founded Stephen LaFrance Pharmacy in 1968. He retired as president and CEO in 2006.

The LaFrance organization has been dogged by internal scandals. Former CFO John Atwood served less than a year in state prison after pleading guilty to stealing more than half a million dollars through billing fraud that went on from 2001 to 2004.

And in a complex and celebrated case that continues in civil court, Garret Sorensen, a former vice president of marketing, pleaded guilty in federal court in May to routing about $525,000 in advertising commissions through a side company that he set up with his wife and sister-in-law.

Memo to Employees

Joe Courtright, president and CEO of USA Drug, sent the following memo to employees at 7:07 a.m. on Thursday, seven minutes after Walgreens released its official announcement:



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