Tuesday, August 28, 2007

Rite Aid is key to Coutu's share health

From the Globe and Mail:
Most Canadian investors have never heard of Rite Aid Corp., even though plenty own shares in it. It's the third biggest drugstore chain in the United States and its biggest shareholder is Jean Coutu Group, the Quebec-based pharmacy chain.

If you own Jean Coutu stock, or if you're thinking about it, looking long and hard at Rite Aid ought to be top of mind because it will likely make or break your investment - and that's becoming more true by the day.

Jean Coutu's investment in Rite Aid, which accounts for a third of the U.S. company's stock, stems from a deal the two companies struck designed to let Jean Coutu extricate itself from a mess.

The Canadian company made its first big foray into the United States 13 years ago with the purchase of a chain of drugstores on Rhode Island called Brooks. That went pretty well. But in 2004, the company made a much bigger, bolder move by buying 1,500 Eckerd stores up and down the eastern seaboard. ...more

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