Walgreens Goes New York

Dearfield, Ill.-based Walgreen Co., owner and operator of over 7,100 drug stores nationwide, is buying its way into the New York City metro market in a huge way with the purchase of Duane Reade, whose presence in the Big Apple is near-ubiquitous.

February 18, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user LancerE

Dearfield, Ill.-based Walgreen Co., owner and operator of over 7,100 drug stores nationwide, is buying its way into the New York City metro market in a huge way with the purchase of Duane Reade, whose presence in the Big Apple is near-ubiquitous. Walgreens currently has only 70 stores in New York City; Duane Reade has 257.

The deal, which was announced on Wednesday and which will probably be finalized in August, means that Walgreens paying $1.075 billion for Duane Reade, including the assumption of debt. According to the Midwestern drug store giant, the New York stores will retain the Duane Reade name. Walgreens will also continue the store-improvement initiative started by the current owners Oak Hill Capital Partners, including widening Duane Reade aisles and uncluttering its shelves.

“This accelerates our opportunity to gain a leading presence in the largest drug store market in the country,” Gregory D. Wasson, Walgreen’s CEO, said Wednesday in a conference call. ““That would take us a long time to continue to do organically.”

Simon Says, Take the Offer Already

Simon Property Group Inc., which made a $10 billion takeover offer for rival General Growth Properties earlier this week, responded on Wednesday to GGP’s lack of interest in the deal. Essentially, Simon said that the clock is ticking on the offer.

“Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your company’s past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders,” Simon chairman and CEO David Simon wrote on Wednesday in a not-private letter to GGP CEO Adam Metz. “I want to reiterate that our offer is not open-ended, and we have a number of other opportunities under consideration.”

Currently Simon is the largest mall owner in the world, with interests in 382 properties. A combination with GGP’s portfolio (about 200 malls) would make it even more of a retail behemoth, with an interest in roughly one-third of the mall space in the United States.

Homebuilding Starts See Uptick

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, homebuilding starts increased 2.8 percent in January 2010 to a seasonally adjusted annual rate of 591,000 units. Both single-family and multifamily starts increased for the month, with single-family starts posting a 1.5 percent gain, while multifamily starts saw a 9.2 percent gain.

Only the Midwest experienced a decline in housing starts last month, down 3.2 percent. By contrast, the Northeast saw the largest increase in starts–some 10 percent–while the West and South registered an 8.9 percent and 1 percent gain, respectively.

The uptick might not have much staying power, however. The Census Bureau and HUD also reported that building permit issuance, an important indicator of future building activity, fell 4.9 percent. There was a whopping 23 percent decline in multifamily unit permits in January, while single-family permits were up only 0.4 percent that month.

Wall Street remained in a chipper mood on Wednesday, with the Dow Jones Industrial Average up 40.43 points, or 0.39 percent. The S&P 500 gained 0.42 percent and the Nasdaq advanced 0.56 percent.