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Penney’s Selling Eckerd Drugstore Chain

April 5, 2004

DALLAS (AP) _ The retailing giant J. C. Penney Co. Inc. is selling its Eckerd drugstore chain for more than $4.5 billion in cash to rivals CVS Corp. and Canada’s Jean Coutu Group Inc.

Rhode Island-based CVS and Jean Coutu Group will split the 2,800 Eckerd’s stores in the deal announced Monday after the conclusion of a lengthy auction process.

The Canadian company will get about 1,540 drug stores and support facilities located in 13 northeastern and mid-Atlantic states and the Eckerd home office in Florida, for $2.375 billion.

Meanwhile, CVS will get about 1,260 Eckerd stores and support facilities in Texas, Florida and the remaining southern states, as well as Eckerd’s pharmacy benefits management and mail order businesses, for $2.150 billion, Plano, Texas-based Penney said in a prepared statement.

Penney, which owns more than 1,000 department stores, said it expects to generate approximately $3.5 billion in cash proceeds after closing adjustments, taxes, fees and other expenses related to the transactions.

Company officials said the deal is subject to normal and customary regulatory approvals, expected to occur by the end of the fiscal second quarter.

``This sale will allow JCPenney to focus entirely on our core department store and catalog/Internet business,″ said Allen Questrom, Penney chairman and chief executive. ``Our core business has made tremendous progress over the past three years, with significant improvement in both sales and operating profit ... .″

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