J.C. Penney selling Eckerd drugstore chain; stores to be split among two rivals

<br>DALLAS (AP) _ Retailing giant J.C. Penney is selling its struggling Eckerd drugstore chain for more than $4.5 billion in cash to rivals CVS Corp. and Jean Coutu Group Inc. <br><br>The deal announced

Monday, April 5th 2004, 12:00 am

By: News On 6

DALLAS (AP) _ Retailing giant J.C. Penney is selling its struggling Eckerd drugstore chain for more than $4.5 billion in cash to rivals CVS Corp. and Jean Coutu Group Inc.

The deal announced Monday will make CVS the biggest U.S. drugstore operator as measured by the number of stores, leapfrogging over Walgreen Co.

Rhode Island-based CVS and Montreal-based Jean Coutu Group, which owns the Brooks Pharmacy chain in the United States, will split the 2,800 Eckerd's stores in 23 states.

``This sale will allow J.C. Penney to focus entirely on our core department store and catalog/Internet business,'' said Allen Questrom, Penney chairman and chief executive. The company owns more than 1,000 department stores.

Under the deal, CVS of Woonsocket, R.I., will get about 1,260 Eckerd stores and support facilities in Texas, Florida and the remaining Southern states, as well as Eckerd's pharmacy benefits management and mail order businesses, for $2.150 billion.

The deal will vault CVS past Walgreen with more than 5,000 stores in 36 states and the District of Columbia. Walgreen is currently the biggest with 4,336 stores as of the end of February while CVS had 4,179 as of early January.

Jean Coutu Group will get about 1,540 drug stores and support facilities located in 13 Northeastern and mid-Atlantic states and the Eckerd home office in Florida, for $2.375 billion.

That will boost its drugstore holdings in North America to 2,196 stores. Its Brooks Pharmacy business operates 333 stores in seven Northeastern states.

Coutu Group said the Eckerd drugstores it acquires will continue to operate under the Eckerd name.

Penney had announced Eckerd's acquisition in November 1996. Analysts said Eckerd struggled to combine all its computer systems and get a handle on merchandise under various private labels and national brands.