Walgreens backs out of Longs buyout offer
DEERFIELD, Ill. In yet another twist and turn to the ongoing tale of the sale of Longs Drugs, Walgreens announced late Wednesday, that it has withdrawn its bid.
“While we believe we made a compelling proposal for Longs, we do not believe it would be in the best interest of Walgreens shareholders, customers or employees to allow this situation to remain unresolved for an extended period of time,” stated Walgreens chairman and chief executive officer Jeff Rein. “Walgreens has a strong balance sheet and robust cash flow. We will continue to focus on strategic initiatives that will maximize value for our shareholders.”
CVS announced in mid-August that it plans to buy for $2.9 billion, including debt, Longs’ 521 retail locations in California, Hawaii, Nevada and Arizona, as well as its PBM services. On Sept. 5, the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act expired, satisfying a condition to the closing of CVS’ offer.
Looking to quash the deal that Longs management had already approved with CVS, Walgreens came forward at the 11th hour with an unsolicited, non-binding bid to buy Longs for nearly $3 billion in cash and debt assumption.
While Walgreens’ offer represented a $3.50 per share premium over the cash purchase price to be paid to Longs shareholders under the proposed acquisition by CVS, the bid from Walgreens immediately raised the eyebrows of several industry analysts given the likely regulatory hurdles and the potential for substantial store divestitures.
Longs rebuffed—twice—Walgreens’ unsolicited bid to acquire the chain but, up until now, Walgreens held its ground maintaining that it would continue to move forward was prepared to go directly to Longs’ stockholders.
“In light of your repeated refusal to accept our invitation to engage in a constructive dialogue that could lead to a mutually beneficial transaction, and the substantial deterioration in the national economic outlook over the past few weeks, we do not believe it would be in the best interests of the shareholders, customers or employees of either Walgreens or Longs to allow this situation to remain unresolved for an extended period of time,” stated Rein in a letter addressed to Longs chairman, president and chief executive officer Warren Bryant. “Accordingly, we have determined to accept the finality of your prior rejections of our Sept. 12 proposal and withdraw our proposal effective immediately.”
Fred’s reports slight gain in total sales numbers for September
MEMPHIS, Tenn Fred’s Inc. on Tuesday reported that total sales for the five weeks ending Oct. 4 were $161.3 million, up slightly from $161.1 million in Sept. 2007.
Excluding stores closed in 2008, total sales from ongoing stores increased 4 percent in September versus the same month last year. Comparable store sales for the month increased 1.1 percent.
“Increased customer transactions during September demonstrate that our sales initiatives
continue to improve the Fred’s shopping experience for our customers and, in turn, are helping us grow market share,” stated Fred’s chief executive officer Michael Hayes. “As the month came to an end, however, we saw a drop-off in our sales as our customers became more apprehensive about the credit crunch and grew more cash restrained. The sales trends in our pharmacy department also continue to affect our top-line sales—even though pharmacy margins are improving—as we experience comparable script growth that is less than the effect of the branded-to-generic script-mix shift.”
Citing that consumer angst over cash flow, Fred’s lowered its outlook for third quarter earnings to a range of $0.14 to $0.16 in earnings per diluted share, as more and more customers are expected to gravitate toward lower-margin departments, the company stated.
Fred’s did not open any stores or pharmacies in September. During the first eight months of the current fiscal year, Fred’s has opened 17 new stores and four new pharmacies.
TRICARE, AAFES launch ‘Get Fit’ Web site to support healthy youth initiative
FALLS CHURCH, Va. The Army and Air Force Exchange Service has partnered with the Defense Commissary Agency and Military OneSource on the launch of a new web page, http://www.tricare.mil/getfit, to promote a healthy lifestyle partnership aimed at military families, the military pharmacy operator announced Monday.
Along with military healthcare payer TRICARE, AAFES is hoping to raise awareness of childhood overweight and obesity issues through the site. The “Healthy Youth for a Healthy Future” initiative was launched by the United States Department of Health and Human Services and this year focuses on childhood obesity.
Partner initiatives include a special childhood obesity “Dietitian’s Voice” column at http://www.commissaries.com. Military families can also get additional information on losing weight, getting in shape and maintaining good health at the DeCA Web site, including advice-packed columns, recipes and an open question and answer forum.
AAFES is also encouraging healthy food choices in its food courts and plans to keep the effort going in November through special coupon offers in shopper circulars.
Citing statistics from the U.S. Surgeon General, obese children are more likely than children of normal weight to become overweight or obese adults. Overweight or obese adults are more at risk for several health problems, including heart disease, type 2 diabetes, stroke, several types of cancer and osteoarthritis.