Rexall acquired by U.S. corporation

The $3 billion deal will see pharma distributor McKesson take control of roughly 470 retail locations across Canada.

U.S.-based McKesson Corporation, a distributor of retail-level pharmaceuticals and a provider of health information technologies, has reached an agreement to acquire Rexall Health from The Katz Group of Companies in a $3 billion deal.

The agreement, expected to close late in 2016, is still subject to review under the Investment Canada Act and the Competition Bureau.

The deal covers approximately 470 retail locations across Canada, which will now be a part of McKesson’s Distribution Solutions division. In a press release, the company stated its intention to maintain the Rexall brand, as well as a dedicated management team that will continue to be led by CEO Jürgen Schreiber, who took the role last summer.

McKesson says it pursued the deal to “strengthen [its] position in Canada’s pharmaceutical supply chain.” McKesson is no stranger to the Canadian market, having established a foothold here after acquiring a 100% interest in Medis Health from Provigo in 1991 and establishing the McKesson Canada name in 2002. In 2012, Katz sold its Drug Trading Company to McKesson, which included 1,100 independent drug stores that operated under the I.D.A., Guardian and Medicine Shoppe banners, reducing its retail footprint to the 470 Rexall locations set to be acquired.

Rexall has been fighting to compete with Shoppers Drug Mart as the latter continues to grow following its acquisition by Loblaw in 2013. In addition to hiring Schreiber, a former Shoppers CEO, and bringing its different locations under the Rexall Health banner, it has experimented with new store formats, product offerings and tweaked branding. In August, Rexall named AndersonDDB its new agency of record.

The Rexall deal is the latest move by a multinational company to expand its presence in Canada. Last month, Lowe’s announced it was set to acquire Rona in a $3.2 billion deal. In October, Searchlight Capital became the majority shareholder in Roots.