Katz Group agrees to sell Independent and Franchise Businesses to McKesson Corporation
Reinforces strategic commitment to expand corporate chain drug business
TORONTO, Jan. 30, 2012 /CNW/ - Katz Group Canada Inc. announced today that it has signed a definitive agreement for the sale of its banner pharmacy business, Drug Trading Company Limited, and its franchise pharmacy business, Medicine Shoppe Canada Inc., to McKesson Corporation for a purchase price of approximately $920 million in cash. As part of the transaction McKesson is also entering into other ancillary agreements with Katz Group. Both Drug Trading and Medicine Shoppe Canada offer purchasing, merchandising and other value-added programs to independent owner-operated pharmacies in Canada.
Under the terms of the agreement McKesson will acquire substantially all of the assets of Drug Trading, the shares of Medicine Shoppe Canada and a joint ownership interest in ProPharm's® pharmacy software application. ProPharm® will work with McKesson through a transition period to ensure McKesson can continue to efficiently support independent banner members and franchisees when the transaction closes and thereafter.
Daryl Katz, Chairman of Katz Group, said, "This transaction unlocks significant value through the sale of two outstanding but non-core assets. We will intensify our focus on our corporately owned Rexall and Rexall/Pharma Plus store network to accelerate the growth of our Rexall brand and the value proposition that it represents to our patients and customers. We will also accelerate the growth of our related real estate interests."
Contemporaneously, Katz Group announced today that its Rexall division has acquired Dell Pharmacies, a well regarded 18 store chain operating in Southern Ontario with approximately $70 million in annual sales. Dell Pharmacies has a long history of providing trusted pharmacy and healthcare services in the Golden Horseshoe. This acquisition is highly complementary to Rexall's existing store base in that market and dovetails well with the group's corporate store strategy. The Dell stores will be integrated into the Rexall network.
Since 2004, Katz Group has redesigned and repositioned more than half of its more than 400 corporate-owned Rexall and Rexall Pharma Plus pharmacies, while introducing a host of innovative customer and patient services, including medication compliance and preventative care.
Mr. Katz added, "We have every confidence that Drug Trading's independent pharmacy members and Medicine Shoppe's franchisees will enjoy market-leading pharmacy support and will continue to grow and prosper under McKesson's leadership. Katz Group Canada will also continue to work closely with McKesson on a number of strategic initiatives that we believe will create significant long-term value for both companies."
Katz Group will continue to supply Drug Trading's Guardian® and I.D.A. TM banners and Medicine Shoppe Canada franchisees with Rexall branded OTC and health and beauty products. McKesson will continue to serve as the primary pharmaceutical distributor for Katz Group's corporately owned stores, Drug Trading and Medicine Shoppe Canada.
The transaction with McKesson is subject to customary closing conditions, including the receipt of Canadian regulatory clearances and is expected to close in the first half of calendar year 2012.
About Katz Group Canada Inc.:
Founded by Daryl Katz, Katz Group Canada is a privately held pharmacy operator and services provider with multiple divisions and subsidiaries in retail, specialty and employer environments including Rexall, the company's flagship corporately owned and operated retail chain. Other pharmacy businesses include Drug Trading Company Limited, Medicine Shoppe Canada Inc., Rexall Specialty, Rexall Health Services, Rexall Direct mail order and ProPharm Limited. With some of the most trusted brands in retail pharmacy, Katz Group is committed to providing community pharmacy care focused on improving the health of Canadians.
About Drug Trading Company Limited:
Drug Trading Company Limited is the largest integrated pharmacy banner and services provider in Canada, providing comprehensive retail and pharmacy programs to more than 850 independent pharmacies from coast to coast. Established in 1897, the company has developed some of the most trusted pharmacy banners in Canadian pharmacy in the Guardian and I.D.A. brands and offers comprehensive independent pharmacy support services including merchandising, marketing, pharmacy services, banner programs and store design.
About Medicine Shoppe Canada Inc.:
In Canada since 1991, The Medicine Shoppe franchise network of owner-operated pharmacies has grown to over 160 stores in nine provinces across Canada, each meeting the needs of Canadians who desire hands-on personal services in a friendly, welcoming environment. Medicine Shoppe Canada Inc. provides license full-service support in running their franchise business including access to the Medicine Shoppe's unique pharmacy model and proven operating systems.
Note to Editors: Visit advancingpharmacy.com for more information.For further information:
Director, Corporate Relations, Katz Group Canada Ltd.
T: 905-501-7894 M: 647-338-4340