Bergen Brunswig Signs Pact With Safeway Worth $1 Billion

Bergen Brunswig Corp. said Thursday it has signed a five-year contract with Safeway Inc. that is expected to bring in $1 billion in revenue over the term of the agreement.

“It is a nice piece of business,” said Donald Spindel, an analyst with the brokerage A.G. Edwards & Sons in St. Louis, though it adds only about 2% to the company’s $8 billion in annual revenue.

Bergen spokeswoman Lisa Riordan said an added value of the contract, however, is prestige. Safeway, based in Oakland, operates 1,068 stores in the United States and Canada, making it the third-largest supermarket chain in North America.

“Safeway is a very well-recognized name,” Riordan said. “And this is our first contract with them.”

Spindel said the agreement is a good sign for Bergen Brunswig, given a market in which pharmaceuticals retailers have been paring down the number of wholesalers with whom they contract.

Bergen Brunswig, based in Orange, will be Safeway’s primary supplier of prescription drugs and related items such as syringes and insulin as well as some over-the-counter products such as vitamins.

Bergen Brunswig’s stock closed at $23.38 a share, up 38 cents, in Thursday’s trading on the New York Stock Exchange.