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McKesson to supply ASC
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June 30, 1998: 9:44 a.m. ET
Wholesaler will provide $1.9B a year in drugs to American Stores Co.
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NEW YORK (CNNfn) - Drug wholesaler McKesson Corp. said Tuesday it has agreed to a supply deal valued at $1.9 billion for American Stores Co.'s 1,100-store chain of drug and food stores.
San Francisco-based McKesson said it will become the sole drug supplier for ASC's American Drug Stores unit, buying $1.5 billion a year in drugs for the chain and helping to manage its inventory and productivity.
McKesson also said it expects $400 million in revenues from direct store deliveries.
The drug distributor currently has revenues of more than $70 million a year from distribution to American Stores' Osco Drug chain.
The new agreement, which has an initial five-year term, is expected to take effect Aug. 1.
McKesson also said it will provide value-added services and technologies to improve operations for American Drug Stores.
The alliance comes about a month after McKesson, the nation's largest wholesale drug distributor, announced it had signed a five-year $5 billion contract to supply both products and services to giant hospital chain Columbia/HCA Healthcare.
Salt Lake City, Utah-based American Drug Stores is one of the nation's largest food and drugstore chains, operating 596 Osco drugstores, 354 Sav-on drugstores and more than 150 pharmacies in Lucky and Acme food stores.
Shares of American Stores (ASC) fell 3/8 to 23-9/16 while McKesson shares (MCK) rose 2-3/8 to 83-1/2. 
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