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

  • Carillion Canada says it's soldiering on despite U.K. parent's financial woes

    Economic CBC News
    A spokesman for the Canadian subsidiary of insolvent British construction giant and state contractor Carillion says it's business as usual in Canada despite the parent company's collapse on Monday. Cody Johnstone says that Carillion Canada is not in liquidation and its 6,000 employees in Canada continue to be paid, along with its subcontractors and suppliers. Source
  • McDonald's sets worldwide recycling goals

    Economic CTV News
    NEW YORK -- McDonald's says it aims to use all recycled or other environmentally friendly materials for its soda cups, Happy Meal boxes and other packaging by 2025. The world's biggest burger chain also wants all of its 37,000 restaurants worldwide to recycle customer waste by that year. Source
  • Canadian natural gas industry a 'sad story': analyst

    Economic CBC News
    A prominent commodities analyst struck a gloomy tone as he delivered a blunt assessment of the Canadian natural gas industry's fortunes this year, describing it as a "sad story." In front of a few hundred oilpatch members at the Calgary Petroleum Club in the city's downtown, commodities analyst Martin King admitted his Tuesday morning presentation for gas was one of his most negative. Source
  • Nutrien to sell Israel Chemical stake for expected US$700 million

    Economic CTV News
    SASKATOON -- Fertilizer giant Nutrien Ltd. says it plans to sell all of its holdings in Israel Chemicals Ltd. in a secondary share offering for an expected US$700 million. The sale comes as one of the requirements set out by global regulators for Potash Corp. Source
  • Australia files WTO complaint against Canadian wine sales measures

    Economic CTV News
    TORONTO - Australia has filed a complaint about Canada's rules around wine sales with the World Trade Organization. The complaint filed Friday argues that Canada's distribution, licensing and sales measures discriminate against imported wine. Source
  • Beer Canada calls on feds to axe increasing beer tax

    Economic CTV News
    OTTAWA -- A trade association for Canada's beer industry wants the federal government to stop its plan to annually increase a tax on the alcoholic drink. Beer Canada has launched a new campaign calling on Canadians to sign a petition asking Finance Minister Bill Morneau to axe the escalating beer tax. Source
  • Instacart buy Unata as it plans Canadian expansion

    Economic CTV News
    TORONTO -- American grocery delivery service Instacart says it has bought Toronto-based technology company Unata to ramp up its expansion efforts across Canada. Instacart's chief business officer Nilam Ganenthiran says the acquisition gives the company access to Unata's digital flyer, loyalty, e-catering and list-building capabilities. Source
  • Australia complains to WTO about Canadian rules on selling wine

    Economic CBC News
    Australia has complained at the World Trade Organization about the rules applied to the sale of wine by Canada and various Canadian provinces, a WTO filing showed on Tuesday. "It appears that a range of distribution, licensing and sales measures such as product markups, market access and listing policies, as well as duties and taxes on wine applied at the federal and provincial level may discriminate, either directly or indirectly, against imported wine," Australia said. Source
  • 'Twice the headache': Why it's getting harder for Canadians to enter U.S.

    Economic CTV News
    Amid negotiations over possible changes to the North American Free Trade Agreement, an immigration lawyer says it’s becoming more difficult for Canadians to cross the U.S. border for work. In 2016, more than 1.1 million Canadians were granted temporary visas to work in the United States. Source
  • N.S. gives payroll rebates to Ernst and Young for new 'centre of excellence'

    Economic CTV News
    HALIFAX - The Nova Scotia government has awarded payroll rebates to Ernst and Young as the professional services firm establishes its first Canadian-based Global Centre of Excellence for Robotic Process Automation Service in Halifax. Nova Scotia Business Inc. Source