Duane Reades are a dime a dozen in New York City, music to the ears of Walgreen (WAG) executives.
Walgreen, the nation’s largest drug store chain, agreed to buy Duane Reade from private-equity firm Oak Hill Capital Partners for about $618 million in cash, excluding debt. When including Duane Reade’s $457 million of debt, the deal is valued at approximately $1.08 billion. WSJ has the details:
Recent visits to Duane Reade stores by Walgreen company management influenced the decision to go forward with the acquisition, [Walgreen CEO Gregory] Wasson said. Walgreen’s decision to move into the New York City area could also allow the pharmacy chain to expand further into the Northeast, Mr. Wasson said.
“It would have taken us many, many years, through our organic store growth model to gain that type of presence” in the New York City area, Mr. Wasson said.
Walgreen’s plans signal a desire to corner the New York City market, especially since there are 257 Duane Reades in the metropolitan area alone.
Walgreen’s executives were right about moving into the Big Apple, too. Analysts at Barrington Research said it would’ve taken the drug store giant a decade to achieve the NYC penetration it immediately gets from the Duane Reade acquisition.
Paul and Madeleine discuss how Simon Properties Group (SPG) makes an offer to buy General Growth Properties, China’s no longer the biggest US Treasurys holder and Greek finance ministry workers strike.
- Greece has one month to show progress toward its goal of reducing its fiscal deficit by four percentage points in GDP terms. But naked capitalism blogger Yves Smith notes some EU officials, like Luxembourg’s Jean-Claude Juncker who says he’s waiting for Greece to take its commitments seriously, are being overly harsh on Greece.
- Banks did a nice job “helping” Greece. “The European Union is now asking Greece for details of what it did. But it should go further,” Floyd Norris says. “It should seek to find out if the banks that helped Greece lie — and thus knew its numbers were false — made money betting against it. If so, do those banks deserve to keep those profits?”
- Paul Krugman continues to bang the we-need-more-stimulus drum at his Conscience of a Liberal blog. He notes ARRA stimulus “fades out fast starting in fiscal 2011, which starts in October 2010,” while unemployment is still expected to be near current levels. “Fiscal support for the economy will be pulled away with the economy having barely begun to recover,” he says.
- Gawker announces its first-ever acquisition, also ousts its EIC.
- Yahoo (YHOO) just doesn’t carry the same appeal for Carl Icahn anymore. The billionaire activist investor, who at one point held about 75 million Yahoo shares, has slashed his stake down to 12M as of Feb 12.
- Microsoft (MSFT) yesterday revealed AT&T (T) will be its premier wireless partner for its new Windows Phone devices, possibly marking another reason for Apple (AAPL) to drop its AT&T iPhone exclusivity, Dan Frommer writes.
- Gold has a monster up day, breaks above its 50-day moving average and puts its recent correction behind it, Bespoke notes.
- Insider buying continues to show a bearish tone. “It remains clear that insiders are very hesitant to make long-term investments in their own shares due to continuing negative hiring trends and little to no sign of organic revenue growth,” the Pragmatic Capitalist says.
- Time for a concrete answer on financial reform, but who knows how it’ll all turn out. “Congress will do something. Voters expect it and they’ll deliver,” Mark Thoma says. “The question is whether the changes they make will have any teeth, and whether they’ll be directed at the right problems.”
- Folks may want to take today’s gains with a grain of salt. Volume is still lousy, and traders look at strong volume as a way to gauge the conviction behind a market move, our WSJ bud Matt Phillips writes at MarketBeat.
- Good timing for jobless claims to post biggest weekly decline since last summer, James Picerno writes at The Capital Spectator. Drop comes on the heels of two consecutive weekly increases, which prompted fears that the declining trend since March may’ve run its course.
- Even amid the good jobless claims data, keep in mind the pace of firings has diminished, but hiring still seems to be on hold, Miller Tabak’s Peter Boockvar says.
- Financial reform chatter is getting tougher. Larry Summers is the latest to chime in. “We’re certainly emphasizing regulating the bankers now, not supporting the kind of irresponsible growth that we saw historically,” he says. Simon Johnson weighs in.
- Is Google stalling on its “new approach” to China? It’s been a month and Google still censors its search results. “Is the moral high ground the company claimed a month ago proving just a bit too high?” Digital Daily blogger John Paczkowski ponders.
- S&P 500, which firmly traded in overbought territory for months, not finds itself in oversold territory, where it’s been since mid-January, Bespoke Investment Group says.
- If treasury yields break to the upside alongside corporate bond yields, “there is a distinct possibility…that there may be no places to hide in 2010 other than perhaps the much despised US dollar,” says Mike Shedlock, an investment advisor for Sitka Pacific. “Risk is very high, and rising.”
- Dell’s latest deal, acquiring Kace Networks, looks like a “savvy” move.
- Blogsrip Google for privacy concerns surrounding Buzz.
- Furloughs, wage freezes continue at USA Today. “We will evaluate business conditions on a quarterly basis and institute a fair and equitable compensation increase plan as soon as conditions permit,” Gannett Blogger Jim Hopkins reports.
- About a quarter of the 8.4M jobs eliminated since recession began won’t be coming back, according to economists polled in WSJ’s latest survey.
- Germany’s considering a plan with its EU partners to offer Greece and other troubled euro zone members loan guarantees.
- Debt problems in Europe seem to be growing by the day. But Greece is tiny compared to the rest of Europe. So are Portugal and Ireland. Paul Krugman argues the problem is contained. But isn’t that the same thing they said about subprime in 2007?
- Barnes & Noble’s (BKS) Nook e-reader will finally be available in stores tomorrow, only about four months after original unveiling. “Better late than never. But not a lot better,” Peter Kafka says, as iPad has essentially redefined e-reader market. “It’s now Amazon’s Kindle vs Apple’s iPad.”
- Google’s (GOOG) new foray into social networking, dubbed Google Buzz, has pros and cons. Seems like a clean design, but “lacks any imagination,” Dan Frommer notes.
- Apple’s repudiation of Flash follows its same pattern with floppy drives in the first iMacs, John Paczkowski writes. “It’s a move that inevitably generates great controversy and criticism, but ultimately proves to be ahead of its time.”
- “If you want to understand Obamanomics one year out, look at the demand-side hole we’re still in, the gargantuan boomer deficit we’re heading for, and the mad-as-hell party these bad times have spawned,” former labor secretary Robert Reich says. “How Obama deals with all three will be the real economic test of his presidency.”
- EBay looks to users for help enhancing search. “It’s imperative that we have a deeper conversation with customers and buyers,” Christopher Payne, eBay VP of search, tells NYT’s Bits blog. “It’s fair to say it’s a cultural change at eBay.”
- Hiring won’t ramp up without demand. “No responsible business owner would incur additional debt to hire more workers – unless the company anticipates a major demand increase,” The Atlantic’s Daniel Indiviglio says. “I doubt that’s happening at many smaller firms right now.”
- Average length of time unemployed workers have been out of jobs is at an all-time high, NYT’s Economix blog notes.
- Morningstar buys financial blog Footnoted. Deal’s terms weren’t disclosed. “While I negotiated mightily for the keys to the Gulfstream, the corporate apartment in Paris, the company yacht, the lifetime consulting contract and, of course, a tax gross up — all crazy perks we’ve written about in various M&A deals — I came up empty handed,” Michelle Leder says. “That’s because Morningstar doesn’t believe in those sorts of things. Nor do I.”
- Econbrowser blogger James Hamilton details how the Fed earned that $46B profit last year.
- NY Times (NYT) finally looks ready to put its site behind some sort of pay wall. Felix Salmon remains optimistic if it’s implemented correctly, Jeff Jarvis is against it and Barry Graubart is skeptical, although he admits that NYT can’t be blamed for trying.
- Big banks need to be broken up, Rick Boockstaber, senior policy adviser at the SEC, writes on his blog.
- Has the Fed really been buying stock futures since the March rally began? TrimTabs’ Charles Biderman believes the theory is possible, but Barron’s Mike Santoli calls him out. Barry Ritholtz adds his two cents at The Big Picture.
- The Tonight Show drama keeps escalating, but Mark Cuban actually praises NBCU CEO Jeff Zucker for making the bold move to shift Leno to prime time, even though it backfired.
- Insider transactions continue to remain lopsided. “As the recession on Main Street continues, the negative trends in insider buying get even worse,” the Pragmatic Capitalist says.
- GDP may sparkle, but demand still looks dull. “With the huge overhang of existing home inventory and record rental vacancies, and the ongoing repair of household balance sheets, I expect underlying demand to remain weak in 2010,” Bill McrBride writes at Calculated Risk.
- VCs starting to compete directly with M&A market. “Entrepreneurs are waiting longer to take their companies public and that’s a very good thing for everyone,” VC Fred Wilson says. “With the emergence of this new layer of late stage/primary+secondary capital, we can all wait a bit longer. And not sell out. And that’s a very good thing.”
- John Hussman looks at inflation expectations over the next decade. “From a longer-term perspective, however, I believe that inflation will be a major event in the latter part of the coming decade, with the consumer price index roughly doubling over the next ten years,” he says.
- MetLife’s in final negotiations to purchase one of AIG’s biggest international life-insurance units – Alico – for between $14 billion and $15 billion.
Posted by Paul Vignaon January 19, 2010 M&A /
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Duane Reades are a dime a dozen in New York City, music to the ears of Walgreen (WAG) executives.
