Walgreen Agrees to Buy USA Drug Chain for $438 Million

Walgreen Co. (WAG), the largest U.S. drugstore chain, agreed to buy the owner of the USA Drug chain for about $438 million, gaining stores in southern states including Arkansas and Mississippi.

Walgreen will purchase the stock of Stephen L. LaFrance Holdings Inc., which owns most of the acquired business, according to a statement today.

The transaction gives Walgreen 144 stores under brands including Super D Drug and May’s Drug, as well as corporate offices and a distribution center in Arkansas. It’s Walgreen’s second deal in about two weeks, after the Deerfield, Illinois- based company agreed to buy a 45 percent stake in Alliance Boots GmbH for $6.7 billion last month to expand globally.

“They’re trying to really, really dominate the U.S. pharmaceutical scene,” Brian Sozzi, an independent analyst in New York, said in an interview. “It’s just a lot of stuff going on with this company where I don’t know if they have the personnel to integrate all these businesses at once.”

The USA Drug chain had sales of $825 million in 2011, according to the statement. The transaction, expected to close in September, won’t have a material impact on Walgreen’s earnings per share for fiscal year 2012, the companies said.

Walgreen rose 0.9 percent to $29.87 at the close in New York. The shares have dropped 9.6 percent this year.

“They’re levering up the balance sheet and that’s another big concern,” Sozzi said.

Walgreen, which has about 7,890 drugstores in the U.S., had about $2.4 billion in total debt as of May 31.

To contact the reporters on this story: James Callan in New York at jcallan2@bloomberg.net; Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net