Penney Said to Be Close to a Deal to Sell Eckerd

J.C. Penney Co. is nearing a deal to sell its struggling Eckerd drugstore chain in two parts to Canadian firm Jean Coutu Group and CVS Corp. for nearly $4.4 billion in cash, sources close to the situation said.

The negotiations were entering their final stages Thursday but remained sensitive and could still fall apart, the sources said.

The deal would mark the end of a six-month auction for the subsidiary, the fourth-largest U.S. drugstore chain with about 2,700 stores primarily on the East Coast, which has seen its profit decline steeply in recent quarters.

The sources said a final transaction was likely to be announced early next week. J.C. Penney, CVS and Coutu did not return calls seeking comment Thursday.

J.C. Penney disclosed the $4.4-billion price tag in a regulatory filing Wednesday, when it wrote down the fair value of the Eckerd franchise by $450 million to $4.37 billion.

The total is less than J.C. Penney had initially hoped for, but it still represents a higher valuation than many analysts believed the struggling chain would garner.

J.C. Penney shares slid 48 cents to $34.30 on the New York Stock Exchange. The stock is up more than 31% since the end of January.

J.C. Penney, based in Plano, Texas, decided to split the sale of the franchise in two after final-round bids for the entire company were lower than expected, sources said.