Target to Sell Its Pharmacy, Clinics Businesses to CVS for Nearly $2 Billion
CVS said it will acquire more than 1,660 Target pharmacies across 47 states and operate them through a store-within-a-store format and every new Target store that offer pharmacy services will include a CVS pharmacy.
Target's nearly 80 clinics will be rebranded as MinuteClinic and CVS will open up to 20 new clinics in Target stores within three years of the deal closing, the companies said in a statement.
CVS's shares were up 0.4 percent at $102.65 in premarket trading on Monday, while Target's were flat at $79.50.
The two companies said they plan to develop five to 10 small-format stores – branded as TargetExpress and including a CVS pharmacy – over two years after the deal closes, which is expected near the end of 2015.
CVS said it will finance the deal through debt. To lower its leverage ratio the company said it would reduce its 2015 share repurchase target to $5 billion from $6 billion.
The reduced stock buyback target led the company to cut its 2015 adjusted earnings forecast by about 1 cent per share and 2016 forecast by about 4 cents per share.
The deal will reduce 2016 adjusted earnings by about 6 cents per share, CVS said.
Barclays is CVS's financial adviser, while Target's is Goldman Sachs.
CVS's legal adviser is Fried Frank and regulatory adviser is Dechert LLP. Target's legal advisers are Faegre Baker Daniels LLP, Wachtell, Lipton, Rosen & Katz, and Dorsey & Whitney.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila and Savio D'Souza)
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