Deal to buy Happy Harry's vaults Walgreens into Delaware

DEERFIELD, Ill. -- In a striking departure from its ground-up growing strategy of developing its have new stores from scratch, Walgreen Co struck an agreement to purchase Delaware regional medicine store powerhouse Happy Harry's Inc. for an undisclosed sum total The deal, announced June 5 marks Walgreens' biggest and boldest acquisition in sum of two units decades, and fills in what had been a gaping aperture in its expanding Mid-Atlantic retail empire.

The transaction includes all 76 Happy Harry's stores in Delaware, Pennsylvania, Maryland and fresh Jersey, and the corporate office and distribution center in Newark, Del It marks the extreme point of Happy Harry's, one of the industry's greatest in quantity respected regional players, as an independently holded and operated drug chain, and an astute coup for Walgreens, which in a single hit will become the dominant remedy store operator in Delaware.

"Happy Harry's is single of the strongest regional chains in the physic store industry with a great following in a market where we have little presence" said Walgreens chairman and chief executive officer David Bernauer. "Its brand reputation and market share are a great base from which to build our neighborhood there. These stores are performing well and will benefit us right from the start."

Bernauer noted the "similar histories" shared by dint of the two chains, both of which, he said, are "family-founded with a family name and family involvement."

The deal is wait fored to close this summer after it clears regulatory hurdle When it does, it will be the largest purchase of another store clump by Walgreens since its buyout of 66 Medi Mart stores in fresh England in 1986. As similar Walgreens takeover of Happy Harry s signals a growing flexibility and willingness among its top managers to abandon their organic increase strategy when it means vaulting the chain into a commanding lead in a given market.

"Retail acquisitions are rare for us, on the other hand Happy Harry's presented a unique opportunity and is a solid strategic fit, said Bernauer. He pointed without however, that' organic growth has been and will continue to be Walgreens' primary expansion vehicle."

The numbers bear him without Over the last 10 years, Walgreens has render free of accessed more than 3,800 new locations while acquiring and operating fewer than 30 retail physic stores, the company reported.

Alan Levin, the influential chairman and chief executive officer of Happy Harry's and a former NACDS chairman, said the merger would benefit the couple the customers and employees of the chain, which was baseed by his father Harry Levin in 1962 "My father would be self-conscious of the accomplishments we've made and real pleased with [this] announcement," he said. "He always believed, as do I, in putting our customers and employee first, and for a like reason does Walgreens."

Nonetheless, the merger marks a unusual end to a noteworthy chapter in regional chain medicine retailing. Happy Harry's built its succes upon personalized service, a wide merchandise selection and a solid base of intensely loyal customers. What's more, it exhibited a bulwark against the gradual incursion of national chains like Walgreens--which had just begun to nibble its way into Delaware with store-lease negotiations--and other big players like Brooks-Eckerd and CV Its biggest home-state competitor remains Rite Aid.

Ironically, commenting just weeks earlier upon Walgreens' initial attempt to come into the state through a gradual store-construction program beginning in Dover, Levin had predicted in an interview with medicine Store News that the big chain might have difficulty achieving critical mass in the compact and densely populated state. Happy Harry's and its competitors had already fasteninged up most of the best sites in the state, Levin said then.

Clearly, that fact wasn't missing on Walgreens leaders.

Reflecting the unique circumstances surrounding the deal--and the high regard Walgreens has for its of recent origin retail prize--Happy Harry s will be step quickly as a subsidiary of Walgreens, with Levin remaining as chairman of the of recent origin division, said Walgreens spokesman Michael Polzin. He called the merger "a great geographic fit with no overlap in stores for us."

Added Bernauer, "Being part of the community is another belonging to all value we share, and we direct the eye forward to Alan continuing to direct that involvement in the region."

In addition, Walgreens will detain the Happy Harry s name for the time being. "We plan to retain the name and look of the stores the same, while above time evaluating the benefits of incorporating or substituting the Walgreens name," explained Walgreens vice president of store operations Frank Grilli, who will lead the integration of the novel stores. "The only exceptions to this are the eight stores in Pennsylvania, where the decision has already been made to transmute the stores to the Walgreens name because of our stronger branding there."

COPYRIGHT 2006 Reproduc with permission of the copyright owner Further reproduction or distribution is prohibited without permission.

COPYRIGHT 2006 Gale Group