Montreal — Jean Coutu Group Inc. is eyeing another big acquisition in the U.S. market and has targeted two or three U.S. drugstore chains as potential candidates, members of the Coutu family executive team revealed Tuesday.

"We're closely following two, three chains in the United States," Michel Coutu, president and chief executive officer of U.S. operations, told reporters after a shareholders' meeting at which founder and family patriarch Jean Coutu announced that he is handing over the CEO title to François Jean, his 47-year-old son and the company president.

"We're already engaged," Jean Coutu, 75, told reporters before hastily correcting himself by saying, "We're already in a serious relationship with two or three" outfits.

A transaction in Canada is also a possibility, perhaps in the Maritimes, he added.

Jean Coutu Group, Canada's second-biggest drugstore chain, has the means to do a deal in the $500-million to $1-billion range without having to tap equity markets, said Mr. Coutu, who is relinquishing the CEO title after 32 years but will stay on as chairman.

One scenario is for Jean Coutu Group to buy up a chain in concert with two other allies and break it up amongst themselves, he said, revealing that his company "came close" to pulling off just such a deal a little over a year ago.

The target was a publicly listed U.S. outfit, and it could well turn up again on the radar screen, said Michel, 49, one of five Coutu offspring on the family-controlled board.

Michel would not reveal which chain, but Mr. Coutu indicated that his company has the resources to buy part of a giant such as Camp Hill, Pa.-based Rite Aid Corp., the No. 3 drugstore chain in the United States with 3,500 stores.

Jean Coutu Group, based in Longueuil, Que., has been on a major expansion drive in New England, with the $240-million (U.S.) purchase last year of 80 Osco stores in Boston and southern New Hampshire from supermarket giant Alberston's Inc.

Jean Coutu Group now operates 333 outlets in seven states in the United States under the Brooks Pharmacy banner.

In Canada, it has 263 stores and 38 drugstore-medical clinics, mostly in Quebec.

About two years ago, Jean Coutu Group tried to swallow Toronto-based Shoppers Drug Mart Corp., the biggest chain in Canada, but was outbid in a $2.55-billion (Canadian) deal by a group led by Kohlberg Kravis Roberts & Co., a U.S.-based buyout firm.

During the meeting, Jean Coutu — who owns 92 per cent of the voting rights — reassured shareholders that he will continue to have a say in the direction of the company.

"This isn't a resignation. It's a different presence," the plain-spoken Mr. Coutu told one worried shareholder.

Mr. Coutu is a pharmacist by training and became a business icon in Quebec for the retail empire he built after opening his first store in east-end Montreal.

Director Erik Péladeau said afterwards that he doesn't expect much to change in the way the company is run, given the key roles François Jean and Michel have played for more than 10 years now and the continued strong grip of Mr. Coutu, père.

The two sons "have a proven track record. They are delivering. They are not just there because their name is Coutu," said Mr. Péladeau, whose younger brother Pierre Karl was groomed by their father Pierre Péladeau for the top spot at Quebecor Inc.

Also Tuesday, shareholders approved a two-for-one stock split.

For the year ended May 31, 2002, sales at Jean Coutu Group reached $3.6-billion.