McKesson (MCK) Expands in Canada

McKesson (MCK) Expands in Canada

McKesson (MCK) Expands in Canada

National drugstore chain Rexall Health is being sold to USA health care giant McKesson part of a $3-billion deal, the two companies announced Wednesday, March 2. "With McKesson, Rexall Health will be able to serve a complete range of pharmaceutical care needs and ensure choice to consumers at a time when Canadians are more concerned than ever about their healthcare".

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

The companies said Rexall Health will continue to be led by its current Canadian management team, headed by CEO Jurgen Schreiber.

The deal will consolidate Canada's second-largest pharmacy chain into USA hands.

"I have the utmost confidence that Rexall Health will continue to flourish under McKesson's ownership and Jürgen Schreiber's continued leadership", Daryl Katz, founder and chairman of Katz Group, said in a news release.

The acquisition, expected to close later this year, should modestly add to McKesson's adjusted earnings in fiscal 2017. McKesson in Canada already operates a network of 2,000 independent drugstores, the bulk of them under the Guardian and I.D.A. banners.

An acquisition of Rexall had been widely expected since Loblaw's blockbuster $12.4 billion purchase of Shoppers in 2013.

RBC analyst Irene Nattel said the deal, which will be funded by cash and debt, was not entirely a surprise.

"This will be a space race between Shoppers Drug Mart and McKesson", said Jim Danahy, CEO of Toronto-based retail advisory firm Customer Lab.

"Going forward, Katz Group will continue to invest in the growth of our three other lines of business: real estate, sports & entertainment, and private and public investments".

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