Jean Coutu Group (TSX:PJC.a)of Longueuil, Quebec, will pay $2.38 billion US in cash to buy 1,539 Eckerd drugstores from J.C. Penney Co., the firms announced Monday.

The acquisition will make Jean Coutu the fourth-largest drugstore chain in North America with 2,196 stores.

Jean Coutu Group already owns 332 U.S. drugstores under the Brooks Pharmacy name in six northeastern states. Coutu is the second-biggest Canadian drugstore chain after Shoppers Drug Mart, with more than 320 outlets; most are in Quebec.

The stores being acquired are located in 13 states in the Northeast and mid-Atlantic U.S. Jean Coutu is also picking up Eckerd's headquarters in Florida.

"This acquisition represents a unique opportunity to expand our presence in North America. Eckerd's network of stores is well positioned on the East Coast and gives us excellent market share in areas we have been targeting for some time," Michel Coutu, the president and CEO of Jean Coutu, said.

The deal is expected to close in June 2004.

J.C. Penney also announced Monday it will sell 1,260 Eckerd drugstores located mainly in Florida and Texas, along with Eckerd's pharmacy benefits management and mail order businesses, to CVS Corp. for $2.15 billion US in cash.

J.C. Penney bought the Eckerd chain back in 1996. But it underperformed other drug chains like Walgreen.

Shares of Jean Coutu were up 15 cents at $18.25 on the TSX.