The Kroger chain is nearing an agreement to buy a small chain of pharmacies from Aramark that would create one of the largest and fastest-growing pharmacy chains in the U.S. Aramark, which has about 30,000 stores in the country, has faced a steady decline in the price of medicines.
The acquisition would allow Kroger to expand its pharmacy business, including expanding the size of its pharmacy footprint.
The deal, which is expected to close in the third quarter, would give Kroger a stake in Aramark for at least five years, said Dan Ariely, a vice president at the pharmacy consulting firm Cigna.
Kroger already owns a stake of about one-quarter of the chain.
“The deal will help us build a larger pharmacy business,” Kroger spokesman Michael McKean said.
Aramack will pay Kroger about $5 billion in cash, he said.
Krogers annual sales will drop by about 9 percent this year.
Kroenke, which also owns the Food Lion chain of restaurants, has said it will not sell Aramark pharmacies to Kroger.
The chain has had a tough time winning customers in the pharmacy sector, which traditionally is a lower-margin business than the grocery and convenience stores.
The company said it has a strategy of focusing on the “biggest value proposition” for its pharmacy businesses, which include prescription drugs and food.
Kroes pharmacy business has been growing at a steady clip, McKea said.
The pharmacy chain has about 35,000 pharmacies in the United States, and it has more than 40 percent of its customers at Kroger, he added.
“Kroger is the number one pharmacy chain in the nation,” Arieley said.
He said the Kroger deal would help to expand Kroger’s pharmacy business.
“It is a win for both companies and Aramark shareholders,” he said in an interview.
Aramarks stock rose 0.3 percent to $18.35 on Thursday.
Kroer shares gained 1.5 percent to close at $42.85.
The price of the deal is expected, but not certain, to fall as Kroger and Aramarks shareholders will have to make sure it will be profitable, he wrote in an e-mailed statement.
Aramashop CEO Steve Schulman said in a blog post on Wednesday that Kroger is “a great opportunity” to build an integrated pharmacy.
Aramarans CEO Brian Dolan said in his blog that Kroenkes pharmacy business will be a “big plus for Kroger in the future.”
“We have a long history of success in delivering our patients great value,” he wrote.
“We look forward to seeing Kroger grow its pharmacy operations and become a global leader in providing high-quality, affordable medicine to its customers.”
Kroger declined to comment.
Ariele said Kroger has had difficulty growing its pharmacy industry and has struggled to keep up with its competition in the market.
“A lot of these pharma chains, in particular Krogers, are just very, very profitable, but they are not delivering,” he added, referring to the pharmacy companies.
Kroker has been trying to expand the pharmacy business as part of its effort to grow its consumer base and increase its market share.
The supermarket chain’s annual sales dropped by about 3 percent this month, according to the U-K-Mart Corp. survey of U.K.-based retailers.
The latest retail sales data showed that sales dropped 3.7 percent in July.
A new report from the Food and Drug Administration showed that Kroker had more than $30 billion in sales in July, including $21.6 billion in prescription drugs, a 7.4 percent increase from the same month a year earlier.
Kroader said the company had $13 billion in profit for the month, and that its overall sales were up 3.5 times over the same period last year.
Shares of Aramark closed up 2.5 cents at $45.50 on Thursday, trading at $38.35.
Arama, which owns a minority stake in Kroger but has no control over the chain, declined to discuss its strategy in the deal.
“This is not about Kroger,” Arian Gershman, a spokesman for Aramark in a statement, said in the statement.
This is a natural extension of our strategy of growth and diversification. “
As a company, we are looking to expand and strengthen our presence in areas such as retail, hospitality, food services, and healthcare.
We are confident that we will be able to continue this growth trajectory in the coming years.””
To date, our sales have been strong and we have strong growth prospects for the future.
We are confident that we will be able to continue this growth trajectory in the coming years.”