Report: Walgreens' interest in Shoppers Drug Mart spurred Loblaw offer

TORONTO — The Loblaw Co. may have pulled the trigger on its acquisition of Shoppers Drug Mart upon learning of Walgreens' interest in the Canadian pharmacy operation, according to a report in Toronto's National Post published Tuesday. 

The report cited two industry sources. However, Shoppers Drug Mart chairman Holger Kluge suggested that the chain has had more than a few suitors during an analyst call Monday. 

According to the report, the deal has a $300-million break fee should Shoppers Drug Mart entertain a larger offer. And while the fee is relatively small for an acquisition of this magnitude, a subsequent bid from a U.S. firm is unlikely the Post reported. 

While any alleged Walgreens interest may have influenced the timing of the deal, the Loblaw-Shoppers deal may have happened nonetheless as it follows the acquisition of Safeway Canada by Sobey's last month and a growing incursion of U.S. retail north of the border, including both Target Canada and Walmart Canada. Competition across Canada is heating up, setting the stage for additional consolidation.

Combined Loblaw and Shoppers Drug Mart will operate 1,797 pharmacies across a total of 2,348 locations, meaning 1-in-5 Canadian pharmacies now will be operated by the merged company. Shoppers Drug Mart represents $4.9 billion in annual pharmacy sales, representing 47.3% of sales and $3.9 million in pharmacy sales on a per store basis. And if Loblaw's pharmacy sales are brought up to that level, the merged companies will represent $6.8 billion in pharmacy revenue. 

Are you a nurse practitioner or physician's assistant? Join our Facebook group to get all the latest news dedicated to delivering healthcare services to patients in retail pharmacy clinics.

Login or Register to post a comment.