Walgreens to Acquire USA Drug Pharmacy Chain in Mid-South

DEERFIELD, Ill., July 05, 2012 - Walgreen Co. (NYSE:WAG) (NASDAQ:WAG) announced today that it has entered into an agreement to purchase a regional drugstore chain in the mid-South region of the United States from Stephen L. LaFrance Holdings, Inc. and members of the LaFrance family.

The transaction includes 144 stores currently operated under the USA Drug, Super D Drug, May’s Drug, Med-X and Drug Warehouse stores located in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee. The acquisition also includes corporate offices, a distribution center located in Pine Bluff, Ark., and a wholesale and private brand business, for a total of approximately $438 million subject to adjustment in certain circumstances. The chain recorded sales of $825 million in 2011.

“This acquisition expands our business in an important region of the country,” said Walgreens President and CEO Greg Wasson. “It will provide significant new pharmacy business for us in this region while also enabling us to bring the Walgreens experience to many additional smaller communities where USA Drug has developed strong operational expertise.”

The transaction is subject to satisfaction of regulatory requirements and other closing conditions, and is expected to close around Sept. 1, 2012. Walgreens currently expects that the transaction will not have a material impact on earnings per share in fiscal year 2012.

“What is now USA Drug began from a single store I opened in Pine Bluff, Ark., in 1968 and has grown to more than 140 stores in seven states,” said Stephen L. LaFrance, Chairman and Owner of Stephen L. LaFrance Holdings, Inc. “We chose to sell our business to Walgreens not only because it is the premier drugstore company in our industry, but also because Walgreens will continue to provide our customers with the service and products they have come to expect.

“I have loved every minute of my career these past 44 years, beginning as a pharmacist, then management and currently as owner and chairman. From the bottom of my heart, I would like to thank everyone who has been a part of my success: from my vendors, bankers, partners, employees, family and most importantly to my customers. I want to thank all of them for placing so much trust and faith in me. Without them, none of what I have accomplished would have been possible.”

The transaction is structured as a purchase of the stock of Stephen L. LaFrance Holdings, Inc., which owns most of the acquired business, and also includes the purchase of assets or stock of certain affiliated companies or stores and other parts of the business that are not owned by that holding company.

The acquired drugstores will continue in the near term to operate under their current brand names after the transaction closes, and decisions will be made over time regarding the best, most effective way to harmonize Walgreens and the acquired brands.

About Walgreens

As the nation's largest drugstore chain with fiscal 2011 sales of $72 billion, Walgreens (www.walgreens.com) vision is to become America’s first choice for health and daily living. Each day, Walgreens provides nearly 6 million customers the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice in communities across America. Walgreens scope of pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with respiratory services. These services improve health outcomes and lower costs for payers including employers, managed care organizations, health systems, pharmacy benefit managers and the public sector. The company operates 7,890 drugstores in all 50 states, the District of Columbia and Puerto Rico. Take Care Health Systems is a Walgreens subsidiary that is the largest and most comprehensive manager of worksite health and wellness centers and in-store convenient care clinics, with more than 700 locations throughout the country.

About Stephen L. LaFrance Holdings, Inc.

Founded in 1968, Stephen L. LaFrance Holdings, Inc. (and its affiliates) operates a pharmacy chain with 144 locations in eight states, under the brands USA Drug, Super D Drug, May’s Drug, Med-X and Drug Warehouse. The company also owns a wholesaling and private brand business in Pine Bluff, Ark. Headquartered in Little Rock, Ark., the company is privately held and family operated.

Cautionary Note Regarding Forward-looking Statements: Statements in this press release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “likely,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project,” “intend,” “plan,” “continue,” “sustain,” “synergy,” ”on track,” “believe,” “seek,” “estimate,” “anticipate,” “may,” ”possible,” “assume,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including: the ability to satisfy the closing conditions and consummate the proposed transactions on a timely basis or at all, the ability to successfully integrate the acquired business, the ability to realize anticipated synergies, the ability to achieve anticipated financial results, changes in vendor, payer and customer relationships and terms, and other factors described in Item 1A (Risk Factors) of Walgreens most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference and in other documents that Walgreens files or furnishes with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, Walgreens does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this report, whether as a result of new information, future events, changes in assumptions or otherwise.