Let the Bidding for Eckerd Begin

Nov 21, 2003
George Anderson

By George Anderson

At least two groups are expected to announce their initial interest in buying the Eckerd drugstore chain from JC Penney, reports the Financial Times.

CVS and the private equity fund, Kohlberg Kravis Roberts (KKR) are expected to submit an initial statement of interest today along with the Canadian drugstore chain, Jean Coutu. There has been no indication, yet, if others will join the bidding.

Part of CVS’ concerns in any possible deal to buy Eckerd are possible anti-trust issues in the north-east where CVS is extremely strong. Hooking up with KKR, it is hoped, will allow CVS to work around any concerns the government may have.

Moderator’s Comment: What do you see as the best case sales scenario for Eckerd, its customers and vendors?

We’ve heard rumors, and this was addressed briefly in the Financial Times piece, that JC Penney may eventually choose to not sell Eckerd but simply
change management at the chain.

This would be a huge mistake for two reasons.

  1. The department store chain’s focus has not been on Eckerd since the day it took over ownership. Eckerd needs 24/7 attention. It doesn’t need to be funneling
    earnings anywhere but back to its own business and, if it makes sense, to shareholders.

  2. We can’t speak to Eckerd’s entire executive team but Wayne Harris and David Aston are top notch and will get the job done given time and sufficient resources.
    A change now would only put Eckerd a few more steps back in the wrong direction.
    Anderson – Moderator

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