ARGUS Maintains Buy Rating on Walgreen (WAG), Says Acquisition Offer of Longs (LDG) Out Of Character

September 15, 2008 10:29 AM EDT

ARGUS maintains a Buy rating on Walgreen Co. (NYSE: WAG) with a target price of $50.

ARGUS analyst says, "The company's proposal to acquire Longs Drug stores (NYSE: LDG) is somewhat out of character for WAG, but we believe that Longs' presence in California and Hawaii, as well as Walgreen's respect for Longs real estate strategy were probably factors in the offer. The drug store business is very much about having convenient locations. Based on a number of discussions with folks in the industry, we think it would be difficult to out position Longs in many of its markets. We don't think, however, that WAG would place a bid just to snub CVS (NYSE: CVS). Walgreen's management told us in the past that it won't do a deal just to top a competitor. Each transaction that it does must meet the company's return hurdles."

Walgreen Company (Walgreen) operates retail drugstore chains that are engaged in the retail sale of prescription and non-prescription drugs, and general merchandise.[SM]

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