McKesson Corp. explores sale of Rexall pharmacy chain

McKesson Corp. is gearing up to divest its Canadian drugstore chain, Rexall Pharmacy Group, seven years after the initial acquisition valued at approximately $3 billion (US$2.2 billion), according to the Globe and Mail. The Texas-based pharmaceutical giant has enlisted CIBC as its sell-side financial advisor for the potential sale.

McKesson’s acquisition of Rexall in 2016 from Katz Group was a significant move to solidify its presence in Canada’s pharmaceutical supply chain. Operating 400 pharmacies nationwide and boasting an employee base of 8,000, Rexall also houses a pharmaceutical distribution arm.

While McKesson remains tight-lipped about the ongoing developments, it has communicated with potential buyers since the summer, entering the second round of offers with no finalized bid date, according to the Globe and Mail. As per the report, the sale may or may not include Rexall’s pharmaceutical distribution arm, which has piqued the interest of several potential bidders.

Reports indicate McKesson might sustain a partnership with Rexall by continuing to supply the chain through its distribution business even after the potential sale, first hinted at by the Globe and Mail. Grocery stores, rival pharmacies, and private equity companies are reportedly among the prospective candidates eyeing the acquisition, adding an air of anticipation to the unfolding saga. However, according to the Globe and Mail, Rexall and McKesson declined to comment on the ongoing developments despite multiple attempts.

This move follows McKesson’s divestment of its European businesses in 2021, including operations in France, Italy, Ireland, Portugal, Belgium, and Slovenia, as well as its AG headquarters in Stuttgart, Germany. German drug distributor Phoenix Group acquired the assets.

Canadian pharmaceutical dealmaking witnessed a notable surge in 2023, reaching a total value of US$6.8 billion, up from US$1.8 billion in 2022 but slightly down from the US$7.5 billion recorded in 2021, as per data from Dealogic.