Walgreen Co. to Acquire Select Assets of Pharmacy and Medical Specialty Product Provider Familymeds Group Inc.

DEERFIELD, Ill. -- Walgreen Co. (NYSE:WAG) (NASDAQ:WAG) today announced it has reached an agreement to acquire select assets of Farmington, Conn.-based Familymeds Group Inc. (OTCBB:FMRX), a specialty pharmacy and medical specialty product provider. Walgreens is acquiring the assets for approximately $60 million, in addition to assuming certain real estate leases.

The transaction includes 53 company-owned pharmacies in 11 states under the Familymeds Pharmacy, Ethical Pharmacy, Worksite Pharmacy and Arrow Pharmacy & Nutrition Center brand names. Walgreens will continue operating a majority of the pharmacies, including the Worksite Pharmacy locations, which provide services onsite at major employers. The remaining pharmacies will be closed as prescription files are transferred to nearby Walgreens pharmacies.

All of the 500 Familymeds employees at the 53 locations involved are expected to be offered positions with Walgreens.

"This was a chance to add select locations that will increase our local presence, and the prescription file transfers are a proven growth vehicle for our stores near those locations," said Walgreens President and CEO Jeffrey A. Rein. "We also believe the Worksite Pharmacy locations will provide us valuable experience in operating that type of location.

"But even with this transaction, our primary growth vehicle remains building new drugstores from the ground up."

Walgreens plans to open about 500 new drugstores this year, with a net increase of 400 stores after relocations and closings.

Ed Mercadante, Chairman and CEO of Familymeds, said, "I am excited that Walgreens shares our vision of excellence in customer care, intends to grow our clinic and Worksite Pharmacy models and will be offering positions to our associates."

The acquisition is subject to certain terms and conditions, including Familymeds shareholder approval, and is expected to close in the second quarter of calendar 2007.

About Walgreen Co.

Walgreen Co. is the nation's largest drugstore chain with fiscal 2006 sales of $47.4 billion. The company operates 5,611 stores in 48 states and Puerto Rico, including 76 Happy Harry's drugstores in Delaware and surrounding states. Walgreens also provides additional services to pharmacy patients and prescription drug and medical plans through Walgreens Health Services, its managed care division, which includes Walgreens Health Initiatives Inc. (a pharmacy benefits manager), Walgreens Mail Service Inc., Walgreens Home Care Inc. and Walgreens Specialty Pharmacy.

About Familymeds Group, Inc.

Familymeds Group, Inc. is a pharmacy and medical specialty product provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. Familymeds works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. Familymeds operates 81 locations, including 7 franchised locations, in 14 states under the Familymeds Pharmacy and Arrow Pharmacy & Nutrition Center brand names; most of the locations in New England area operate under the Arrow Pharmacy brand. The Company also operates Worksite Pharmacy(SM), which provides solutions for major employer groups. The Company also operates Familymeds Medical Specialty a specialty pharmaceutical distribution business directly to physicians and other healthcare providers. The overall Familymeds business platform is designed to provide pharmaceutical services for the treatment of acute and complex health diseases including chronic medical conditions such as cancer, diabetes and pain management. More information can be found at http://www.familymedsgroup.com. The Company's online product offering can be found at http://www.familymeds.com.