UPDATE 1-US drug retailer McKesson seeks buyers for Canada's Rexall Pharmacy -source
(Adds context, source, financial advisor)
By Maiya Keidan
Jan 12 (Reuters) - McKesson Corp is planning to sell Canadian drugstore chain Rexall Pharmacy Group, a source familiar with the process told Reuters on Friday, seven years after the U.S. drug distributor bought the business for about C$3 billion ($2.2 billion).
Texas-headquartered McKesson has mandated CIBC as a sellside financial advisor, according to the source. A spokesperson for CIBC declined to comment.
McKesson bought the business in 2016 from Katz Group to strengthen its position in Canada's pharmaceutical supply chain. Rexall operates 400 pharmacies across Canada and employs 8,000 people, according to its website. It also has a pharmaceutical distribution arm.
Rival Shoppers Drug Mart claims to be Canada's leading pharmacy retailer with more than 1,300 locations across the country, its website shows.
Rexall did respond to multiple requests for comment, while McKesson declined to comment.
McKesson has been in contact with prospective buyers for Rexall since the summer, according to the source, who said the company was on its second round of offers with no final date for bids.
A sale may not include Rexall's pharmaceutical distribution arm, which is what some potential bidders are interested in, the source said.
The Globe and Mail, which first reported the story, said McKesson could remain a Rexall partner by supplying the chain through the distribution business.
Grocery stores, rival pharmacies and private equity companies are all potential candidates for the business, the source said.
McKesson sold off its European businesses in France, Italy, Ireland, Portugal, Belgium and Slovenia as well as its German-based AG headquarters in Stuttgart in 2021 to German drug distributor Phoenix Group.
Canada-involved pharmaceutical dealmaking rose to $6.8 billion in 2023, up from $1.8 billion in 2022 but down from $7.5 billion in 2021, showed Dealogic data. ($1 = 1.3381 Canadian dollars) (Reporting by Maiya Keidan in Toronto, Harshita Meenaktshi in Bengaluru; Editing by Rashmi Aich, Kirsten Donovan)
