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Bergen Brunswig Gets Out Of the Specialty Retail Business

Executive Summary

Bergen Brunswig Corp's recent announcement that it would sell the specialty pharmacy assets of its Stadtlander Drug Co. subsidiary hardly comes as a surprise. Stadtlander has performed poorly since it was acquired from Counsel Corp. eighteen months ago. Stadtlander is not alone: two other Bergen subsidiaries, PharMerica (which distributes drugs to long-term care facilities) and Bergen Brunswig Medical Corp., a supply business (which is also being sold), have also disappointed.If Bergen's expectations for Stadtlander were not met, say company officials, it was because Counsel's management misled them with respect to the specialty pharmacy's value. Indeed, Bergen sued Counsel, alleging that it was fraudulently induced into paying the price that it did for Stadtlander. That case is pending.So far, investors and analysts have reacted favorably to the Stadtlander sale. In addition to reducing Bergen's debt and eliminating a drag on earnings, parting with Stadtlander is seen as a way for Bergen to refocus its attentions on its core drug distribution business.

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