McKesson to Buy Canadian Rexall Chain

Prescription drug distributor McKesson Corp.is buying Canadian drugstore operator Rexall Health from Katz Group in a deal that will strengthen McKesson¿s Canadian pharmaceutical supply chain.

San Francisco-based McKesson has a long relationship with Rexall's owner, Edmonton-based drug store operator Katz Group Canada Inc., having bought about 1,000 franchised stores under the banners I.D.A. and Guardian for $920-million in 2012.

Rexall Health will continue to have a management team in Canada led by its CEO Jürgen Schreiber, and retain the existing brand.

The acquisition, expected to close later this year, should modestly add to McKesson's adjusted earnings in fiscal 2017.

The deal should close sometime later this year.

The operations of Rexall Health will be part of McKesson's Distribution Solutions segment, reporting to Paul Julian, executive vice president and group president.

As part of the transaction, McKesson intends to acquire Rexall Health's business, including approximately 470 retail pharmacies.

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 deal announced Wednesday gives Rexall's long-time drug distributor the heft to expand more broadly into patient and health care services.

McKesson, which distributes drugs to the USA chains CVS and Rite Aid, has been bulking up its specialty health care business, last month announcing plans to buy two cancer care service providers for US$1.2 billion.

Upon completion, the acquisition will improve McKesson's retail pharmacy capabilities and procurement scale. In a release, the two companies said Rexall and McKesson have already been working together for 20 years.

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