WOONSOCKET, R.I. — CVS Health said Monday that it will acquire Target Corp.’s U.S. pharmacy and clinics businesses for about $1.9 billion.
CVS Health said Monday that it will acquire Target Corp.’s U.S. pharmacy and clinics businesses for about $1.9 billion.
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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 that every new Target store that offers 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’s closing, the companies said.
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 this year.
CVS said it will finance the deal through debt. The company said it would reduce its 2015 share repurchase target to $5 billion from $6 billion.
The deal brings together two leading retailers with complementary strengths, brands and cultures.
The transaction enables CVS Health to reach more patients, adding a new retail channel for its offerings, and expanding convenient options for consumers. It also enables Target to strengthen its focus on wellness as a signature category.
"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said CVS Health president and chief executive officer Larry Merlo. "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."
Target chairman and CEO Brian Cornell remarked that by partnering with CVS Health "we will offer our guests industry-leading health care services and, at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests."
After completion of the transaction, Target guests will have access to CVS Health’s pharmacy care programs and medical clinic services. Pharmacy programs, including Pharmacy Advisor, Specialty Connect and Maintenance Choice, will help consumers achieve better medication adherence through improved convenience and enhanced pharmacy care counseling.
In addition, with MinuteClinics at Target locations, Target guests will have enhanced access to high-quality affordable medical care.
The two companies add that the deal also unlocks future joint development opportunities. Together, Target and CVS Health will evaluate and select locations best suited for new small-format Target stores with a CVS/pharmacy inside.
"We operate in a rapidly changing health care and regulatory environment," noted Merlo. "This requires companies like CVS Health to continually innovate, providing additional points of access, lowering costs and improving quality for both consumers and payors."
