NEW YORK -- Walgreen Co., the largest U.S. drugstore chain, agreed yesterday to buy Happy Harry's Inc. drugstore chain, its biggest purchase ever, to expand into Delaware.
Walgreen is acquiring all 76 Happy Harry's stores in Delaware, Pennsylvania, Maryland and New Jersey, and Happy Harry's corporate office and distribution center in Newark, Del., the retailer said. Financial terms weren't disclosed.
Walgreen, which operates 5,251 stores in 45 states and Puerto Rico, typically grows by building stores instead of through acquisitions as has rival CVS Corp., the No. 2 drugstore chain. Walgreen said it has opened more than 3,800 locations over the past 10 years. The company bought the 66-store Medi Mart chain in the Northeast in 1986.
The purchase "expands the company's Northeast footprint, a region management has pegged for expansion for some time," wrote Raymond James & Associates Inc. analyst John Ransom from St. Petersburg, Fla., in a note yesterday. "The transaction could prove a harbinger of additional small regional-independent pharmacy acquisitions," he said.
Ransom estimates Walgreen is paying $225 million for the chain, or about 0.5 times sales. Happy Harry's had revenue of $479 million for the fiscal year that ended Feb. 28, according to trade magazine Chain Drug Review.
Happy Harry's was founded in 1962 by Harry Levin, father of current Chief Executive Officer Alan Levin. Alan Levin will continue working with Walgreen.
The company plans to keep the name and look of the majority of the Happy Harry's stores it is buying, Walgreen spokesman Michael Polzin said. The acquisition is expected to be completed in the summer.
Shares of Deerfield, Ill.-based Walgreen fell 79 cents to close at $41.86 yesterday on the New York Stock Exchange. They have dropped 5.4 percent this year.