US health and beauty retailer Walgreen has bought New York-based chain Duane Reade for $1.075bn.

Duane Reade has 257 stores – the largest chemist chain in New York – and Walgreens currently operates 7,162 stores in all 50 states.

Duane Reade will continue to operate under its brand name. Walgreens expects to retain Duane Reade’s store, pharmacy and distribution centre staff, and several of the senior management. However, consolidation of core functions will occur over time.

“Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the US,” said Walgreens president and chief executive Greg Wasson. “In addition, Duane Reade’s recent initiatives in urban retailing, customer loyalty and private brand products support and accelerate Walgreens strategy to enhance the customer experience in our network of more than 7,100 stores across the country.”

Over the past two years, Duane Reade has embarked on a brand transformation including new store designs with wide aisles, an improbed pharmacy and enhanced customer service.

The deal is subject to regulatory approvals.