National drugstore giant Walgreens this morning said that it was offering $1.1 billion for New York City rival Duane Reade, a chain that for months has been struggling under a mountain of debt.
As part of the deal, Walgreens will also acquire Duane Reade’s debt. Walgreen also said that it will keep the Duane Reade name on the 257-store chain.
The companies expect the deal to close by Aug. 31.
“Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the U.S.,” Walgreen President and CEO Greg Wasson said in a statement.
The sale comes as Duane Reade’s owner, Oak Hill Capital Partners, has been struggling to keep Duane Reade from defaulting on loans used to buy the chain in a $750 million leveraged buyout in 2004.
As The Post reported in August, Oak Hill had been injecting cash into the drugstore chain in order to push out the deadline for debt coming due and to help finance a makeover of a chain that had drawn jeers from many who complained of cramped stores that weren’t easy to navigate.
However, in the past few months Duane Reade has undergone a makeover that includes renovating stores and introducing a line of private-label food, sushi and personal grooming services. The chain has also introduced a new logo.
For Walgreens, the acquisition of Duane Reade will help the nation’s largest drugstore chain get a toehold in New York City, and positions Walgreen to be better able to do battle with rival CVS. Walgreen says it has around 70 stores in the New York City area, while CVS has more than 100.
In announcing the deal, Walgreens said Duane Reade had unaudited revenue of $1.8 billion for the year ended Dec. 26, and said the chain has the highest sales per square foot of any drug store nationally.
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