CVS Buys West Coast Drug Chain-August 2008

The $2.9-billion price tag for CVS Caremark Corp to acquire Longs Drug Stores Corp will expand the retail giant’s position as the number-1 provider of prescriptions in the United States and enhance its presence in certain markets.

In the deal, CVS will acquire Longs’ 521 retail drugstores in California, Hawaii, Nevada, and Arizona. Further, the acquisition complements CVS’ substantial presence in Southern California and provides a foundation for major growth throughout the state. CVS also will have a leading position in Hawaii, where it currently does not have a presence. In addition, the retail chain is acquiring Longs’ Rx America subsidiary, which offers prescription benefits management (PBM) services to >8 million members and prescription drug plan benefits to approximately 450,000 Medicare beneficiaries.

With an enhanced national reach, CVS will be in a stronger position as it rolls out its new suite of offerings under the Proactive Pharmacy Care model, taking advantage of its retail and PBM services. Following the purchase, CVS will fill or manage >1.2 billion prescriptions per year.

“This transaction provides tremendous benefits to CVS Caremark by accelerating our expansion in very attractive drugstore markets and strengthening our geographic reach,” said Tom Ryan, chairman, president, and chief executive officer of CVS Caremark. “With this acquisition, we will increase accessibility to our pharmacies for consumers and put us in an even better position to grow our new Proactive Pharmacy Care offerings with our PBM clients.”