Shares of CVS Health Corporation (CVS) were trading up +0.43 or +0.42 percent to $102.65 per share in Monday's premarket after news broke early this morning that the company would be buying Target's (TGT) pharmacy and clinical businesses for $1.9 billion. CVS Health Corp. stock closed at $102.22, down -0.41 or -0.40 percent in Friday's regular trading session.
Founded in 1922 as the Melville Corporation and subsequently renamed in 1996 to the CVS Caremark Corporation, Woonsocket, Rhode Island based CVS Health Corporation is a leading U.S. retailer and health care company. CVS Health Corp operates more than 7,800 retail drugstores under the CVS Pharmacy and Longs Drug Stores brands, as well as over 1,000 walk-in MinuteClinic medical clinics. In addition, the company operates a pharmacy benefits manager with over 70 million plan members and an online pharmacy.
Minneapolis, Minnesota based Target Corporation was founded as Dayton Dry Goods in 1902 and is the country's second largest retailer after Walmart (WMT). As of January of this year, the company operated 1,934 stores in the United States. The company had previously operated 133 stores in Canada, nevertheless, the Target decided to close them all putting 17,000 people out of work. The last Target store in Canada closed on April 12th of this year.
The definitive agreement announced by the two companies this morning will have CVS Health acquire Target's pharmacy and clinic businesses for about $1.9 billion. CVS will acquire over 1,660 of Target's pharmacies in 47 states and will operate them in a store within a store format under the CVS/pharmacy brand. Also, a CVS/pharmacy will be included in all new Target stores offering pharmaceutical services.
Target's approximately 80 clinic centers will be rebranded to MinuteClinic with 20 new clinics set to open in Target stores within three years of the deal's closing. In addition, the two companies plan to develop 5 to 10 flexible format stores within two years of the transaction's close under the TargetExpress brand and will include a CVS/pharmacy.
Larry Merlo, CVS Health President and Chief Executive Officer stated in a press release that, "This strategic relationship with Target supports the highly complementary customer base, brand and culture we share. When we introduced the new name for our company, CVS Health, we began a new era of growth with a broader health care focus and an appreciation of the rise of health care consumerism with consumer choice and accountability growing. This relationship with Target will provide consumers with expanded options and access to our unique health care services that lead to better health outcomes and lower overall health care costs."
After the deal is complete, Target guests will gain access to CVS Health's pharmacy care programs and clinical medical services, which include Specialty Connect, Pharmacy Advisor and Maintenance Choice. The timing for the transaction's close is still uncertain, possibly by the end of this year, and will be subject to the customary closing conditions including regulatory considerations.
Stockholders of both companies are showing their approval with both the stocks of both gaining in this morning's premarket.
Other News About CVS
CVS Executive Vice President Helena Foulkes will be speaking at the conference on June 23rd.
CVS operates stores within walking distance of 50 of the nation's leading colleges.
Other Stocks in the News
Dealertrack Technologies stock is up over 55 percent in this morning's premarket.
Company filed for chapter 11 protection yesterday, with an August date targeted for auctioning assets.