Drugstore giant Rite Aid Corp. said yesterday that it agreed to buy Perry Drug Stores Inc., Michigan's biggest pharmacy chain, for about $132 million in cash.
The deal would add 224 stores to the 2,600 Rite Aid operates and about $735 million in sales to Rite Aid's revenue of $4 billion.
Yesterday's announcement came as part of a continuing trend toward consolidation in the retail pharmacy industry that is not likely to end soon, analysts said.
Drugstores are under intense pressure from cost-cutting health insurers on one side and large discounters, such as Wal-Mart and Kmart, on the other. Profit margins on both pharmaceuticals and health and beauty aids have narrowed, and many analysts believe that only the biggest drug operators will thrive in the future.
Rite Aid's offer of $11 for each Perry share represented a fat premium over the $7.75 or so that the stock has been commanding recently. Perry shares shot up yesterday by $3.125 to $10.75.
Even so, Rite Aid, based in Camp Hill, Pa., wasn't paying too much, one analyst said.
"We thought it was a pretty good acquisition for both sides," said Donald W. Hultgren, who follows Rite Aid for Raymond James & Associates, a St. Petersburg, Fla., investment concern. "It helps Rite Aid establish their presence in Michigan, especially in Detroit."
Mr. Hultgren believes the deal will boost Rite Aid's earnings next fiscal year by perhaps 5 cents a share. He had been expecting profit of $1.92 per Rite Aid share for the fiscal year ending February 1996, not counting the purchase of Perry, based in Pontiac, Mich.
Rite Aid, which has more than 150 drugstores in Maryland, has the most outlets of any U.S. drugstore chain.
But Walgreen Co., with sales of $9.23 billion for the fiscal year ended August, has the most revenue.
Rite Aid said it would make a tender offer this week for Perry's stock. The deal depends on a majority of Perry shareholders agreeing to sell as well as approval from federal antitrust regulators.
Perry Drug's Chairman Jack A. Robinson and his wife, who together own about 9 percent of the company's stock, have agreed to sell to Rite Aid.