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wire servicesThe Canadian chain says it's working a deal in the United States, but "Eckerd' never comes up.
The Canadian drugstore chain Jean Coutu Group confirmed Friday that it's in talks to make an acquisition to expand in the United States, but it stopped short of identifying the Eckerd chain based in Largo as its target.
It has been reported that Eckerd parent J.C. Penney Co. is close to striking a deal to split the drugstore chain between CVS Corp. and Jean Coutu. A deal could come within days. But neither of the potential buyers has commented publicly until now.
Coutu, Canada's second-largest publicly traded pharmacy chain, was asked by the Toronto Stock Exchange to publicly address the media reports. It stopped trading for about two hours Friday morning to make a brief statement.
"All we're saying is, we're in negotiations to increase our presence in the U.S.," said Helene Bisson, a spokeswoman for the Longueuil, Quebec, company. She declined to name the acquisition target.
The deal, estimated at $4.4-billion, would break up the country's fourth-largest drug chain and would catapult CVS past Walgreen's as the largest chain with 5,400 stores.
Jean Coutu is expected to end up with about 1,600 Eckerd stores scattered along the East Coast as well as its corporate headquarters, which is in Largo, while CVS acquires - and puts its name on - about 1,200 Eckerd locations in Texas, Louisiana and Florida.
Jean Coutu chief executive Francois Coutu expressed interest in Eckerd when J.C. Penney put the chain up for sale in October. He told analysts at the time that he would look at any serious acquisition available in the United States and that buying Eckerd would add to earnings.
"If consummated, the transaction may well provide fuel for a two- to three-year period of accelerated growth for Jean Coutu," analyst Jason Bilodeau at UBS Global Asset Management in Toronto said in a note to clients. He tempered his enthusiasm "by concerns regarding a company growing its store base fivefold overnight with a portfolio of under-performing stores" and taking on extra debt to do it.
A spokesman for CVS, based in Woonsocket, R.I., declined to comment, as did a J.C. Penney spokesman.
- Information from Bloomberg News was used in this report.