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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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