Walgreen Co. is going to become the No. 1 drugstore operator in New York as the company announced today that it will acquire Duane Reade Holdings Inc., an operator of a chain of 257 New York area drugstores. Both the companies announced today planned definitive agreement under which Walgreens will acquire Duane Reade from affiliates of Oak Hill Capital Partners. The acquisition is supposed to be closed by August 31 this year.

The deal is worth $1.075 billion and includes the assumption of debt. Walgreen called the deal a compelling strategic acquisition. The officials in Walgreen said that the company would fund the purchase with the cash on hand. The agreement has yet to receive regulatory approvals.

According to the deal Walgreen will acquire all 257 Duane Reade stores located in the New York City, as well as the corporate office and two distribution centers of Duane Reade. Walgreen will become the leading drugstore operator in New York after completing the acquisition as Duane Reade is the largest drugstore chain in the New York City metropolitan area.

"Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the U. S.," Gregory D. Wasson, Walgreen's chief executive, said. In the FY
2009 Duane Reade has the highest sales per square foot in the retail drugstore industry in U. S. with un-audited net sales of $1.8 billion.