COMMONS BROTHERS TO ACQUIRE KRELITZ AND NORTHERN DRUG
This article was originally published in The Tan Sheet
COMMONS BROTHERS TO ACQUIRE KRELITZ AND NORTHERN DRUG under a proposal approved by the Krelitz board on July 23. Finalization of the agreements "is subject to certain conditions, including the execution of a definitive acquisition agreement, approval by the shareholders of Krelitz, the satisfactory conclusion of [Common Brothers'] due diligence investigation and the absence of adverse changes between Krelitz' fiscal year end and closing, among others," Krelitz said. New York City-based wholesaler Commons Brothers (through its corporate parent CBI Holding) moved to acquire Krelitz and Northern Drug after the two Minnesota wholesalers had agreed to merge. Northern Drug had proposed to pay $ 4-5 mil. for Krelitz under an agreement in principle announced June 18. "The letter of intent previously announced between Krelitz and Northern Drug is expected to be terminated by mutual agreement," the companies said. Commons Brothers' purchase of Krelitz will be "on generally the same terms and conditions as those proposed by Northern Drug," Krelitz said. In a separate transaction, CBI signed a letter of intent to acquire Northern for an undisclosed amount. Through the acquisitions, Commons Brothers will be adding approximately $ 250 mil.- $ 275 mil. in sales and will expand its wholesaling operations from the Northeast into the upper Midwest. Krelitz reported sales of $ 249.6 mil. in fiscal 1992 (ended May 2, 1992), a decrease of 2%. Through the first nine months of fiscal 1993, Krelitz sales were $ 161.5 mil., down 13.6%. The company has posted losses since fiscal 1991. Its net loss for fiscal 1992 was $ 3.8 mil. The Krelitz family owns more than 50% of the outstanding shares of the company. Former National Wholesale Druggists Association Chairman Barry Krelitz is president and CEO. Krelitz operates through Twin City Wholesale Drug Company in Minneapolis. Privately held Northern Drug, based in Duluth, has annual sales of approximately $ 50 mil. to its 250 accounts. The wholesaler is owned by the Goldfine family, with NWDA board member Steven Goldfine serving as president. "Krelitz and Northern will continue to be operated under existing management," the companies said. Commons Brothers, also privately held, bills itself as "the nation's ninth largest drug wholesaler." The firm has distribution centers in Elmsford and Freeport, N.Y. and Harrisburg, Penn. Commons Brothers had sales of $ 370 mil. for the fiscal year ended April 1991 and subsequently acquired another Northeastern wholesaler, Granain, which had sales of $ 110 mil. The company has established a network of independent drug stores, Nu Health, and recently signed up Circa Pharmaceuticals to repackage a line of up to 120 products.
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