Rexall drugstore chain changing hands in $3B deal

National drugstore chain Rexall Health is being sold to U.S. health care giant McKesson Corp. as part of a $3-billion deal, the two companies announced Wednesday.

See Full Article

The sale, which is still subject to regulatory approvals, would see the Edmonton-based Katz Group transfer Rexall's 470 retail pharmacies to McKesson.

The Katz Group and McKesson have worked together for more than 20 years and said the announcement marks a "natural next step" in their relationship. McKesson had also previously acquired Katz's independent outlets and franchise businesses -- primarily operating as I.D.A. and Guardian -- for about $920 million in 2012.

The deal will expand McKesson's footprint in a country where there is a wealth of opportunity, said John H. Hammergren, chairman and CEO of the San Francisco-based firm.

"Canada's healthcare environment is rapidly evolving; it is marked by a move of primary care into pharmacy and increasingly complex patient demand," he said in a news release Wednesday.

"With today's announcement, McKesson will bring together the strengths and expertise of our diverse portfolio to address challenges and opportunities in delivering the very best patient care."

McKesson said it will have 13,000 employees after the Rexall deal closes, which is expected to happen later this year.

Rexall Health will continue to be led by its current management, headed by CEO Jurgen Schreiber. Schreiber was the former head of Canada's largest pharmacy chain, Shoppers Drug Mart, which is owned by Loblaw Companies Ltd. (TSX:L).

McKesson said the acquisition will help the company drive growth through its fastest growing regions, Ontario and Western Canada.

RBC analyst Irene Nattel said the deal, which will be funded by cash and debt, was not entirely a surprise.

"As a major supplier/distributor to the retail pharmacy segment in Canada, McKesson has been systematically extending its presence at the retail level through the acquisition of independent pharmacists and development of new retail locations," she wrote in a note to clients.

"The acquisition of the Rexall corporate network gives McKesson a strong foothold in Ontario, and should provide stability to the operations as they will now be part of a large, well-capitalized organization."

Since McKesson was already acting as a supplier to Rexall, Nattel doesn't believe this sale will have any "significant implications" to its competitors, Quebec-based pharmacy giant Jean Coutu (TSX:PJC.A) or Shoppers.

In recent years, Rexall has been revamping its pharmacies and introducing new private product label lines in grocery and cosmetics as it faces stiffer competition in the drugstore market.

The founder and chairman of Katz Group, Daryl Katz, said his company will continue to invest in its three other types of business -- real estate, sports and entertainment, and investments.

"I have the utmost confidence that Rexall Health will continue to flourish under McKesson's ownership and Jurgen Schreiber's continued leadership," Katz said in a joint statement with McKesson.

Both McKesson and the Katz Group declined interview requests.



Advertisements

Latest Economic News

  • CEO Suzanne West vows to pursue greener path after oil firm splits with backers

    Economic CTV News
    CALGARY - One of the few female CEOs in the Canadian oilpatch says she has parted ways with her American financial backers and her Calgary company's oil and gas assets have been taken over by a newly-created entity. Source
  • Aurora Cannabis launches hostile takeover bid for CanniMed Therapeutics

    Economic CBC News
    Aurora Cannabis Inc. formally launched its all-stock hostile takeover bid for CanniMed Therapeutics Friday, on the condition that the medical marijuana producer cancel its own planned acquisition of Newstrike Resources Ltd. The Vancouver-headquartered licensed marijuana company says in a statement it placed a newspaper ad for its offer, valued at $24 per share, and a takeover bid circular will be mailed to CanniMed's shareholders. Source
  • Amazon workers in Germany, Italy stage Black Friday strike

    Economic CTV News
    BERLIN -- Workers at a half dozen Amazon distribution centres in Germany and one in Italy walked off the job Friday, in a protest timed to coincide with "Black Friday" to demand better wages from the American online giant. Source
  • Sobeys to cut 800 office jobs as part of reorganization

    Economic CTV News
    STELLARTON, N.S. -- The Sobeys grocery business will be cutting about 800 office jobs across Canada. Its chief executive, Michael Medline, says the job cuts are part of efforts to create one national organization out of five regional businesses. Source
  • Online sales surge in U.S. on eve of Black Friday

    Economic CBC News
    U.S. shoppers had splurged more than $1.52 billion US online by Thanksgiving evening, and more bargain hunters turned up at stores this year after two weak holiday seasons as retailers opened their doors early on the eve of Black Friday. Source
  • Black Friday begins as consumers flock to stores and online

    Economic CBC News
    U.S. shoppers had splurged more than $1.52 billion US online by Thanksgiving evening, and more bargain hunters turned up at stores this year after two weak holiday seasons as retailers opened their doors early on the eve of Black Friday. Source
  • Looking for bargains online? Who you are can affect what you pay

    Economic CBC News
    Ever notice how after online shopping or browsing, the advertisements you see on every website seem to have been personalized to include whatever you were looking for? A Marketplace investigation reveals it's not just ads that your browsing history can affect — it's also the price you're charged. Source
  • Asian stocks drop after big sell-off

    Economic CTV News
    HONG KONG - Asian stock markets were mostly lower Friday with investors finding little guidance with Wall Street closed for the Thanksgiving holiday and Chinese markets in focus after a big sell-off the previous day. Source
  • World stocks rise amid upbeat European data, U.S. holiday

    Economic CTV News
    HONG KONG -- World stock markets were mostly higher Friday after more upbeat economic data in Europe, though trading was still subdued due to the U.S. Thanksgiving holiday. Investors were monitoring Chinese shares, which stabilized after an early tumble. Source
  • Toronto, U.S. stock markets up in broad advance, loonie moves higher

    Economic CTV News
    TORONTO -- The major stock indexes are up moderately this morning. with most of Toronto's subsectors showing gains. The Toronto Stock Exchange's S&P/TSX composite index was up 30.84 points to 16,105.14, after 90 minutes of trading. Source