CVS Caremark is at it again. "It" being acquiring another pharmacy chain - this time CVS has made a deal to buy Longs Drug Stores.
In the past four years, CVS acquired roughly 1,200 Eckerd stores from J.C. Penney, 700 Savon pharmacies from Albertsons and now it is on the verge of acquiring another 521 locations from Longs.
The deal valued at $2.9 billion, if approved by regulators, will give CVS a strong foothold in Arizona, California, Hawaii and Nevada.
Tom Ryan, chairman, president and chief executive of CVS Caremark, said in a press release, "This transaction provides tremendous benefits to CVS Caremark by accelerating our expansion in very attractive drugstore markets and strengthening our geographic reach. In fact, Longs has a significant presence in ten non-CVS markets that are among the top 100 drugstore markets in the country. More than 490 of the stores we are acquiring are located in the Central and Northern California and Hawaiian markets, where Longs is a leading player. Longs' store network in these regions is excellent and is one that would take a decade or more for us to replicate through organic growth."
Warren Bryant, chairman, president and chief executive officer of Longs, said, "Over the course of the last five years, we have transformed Longs into a stronger, more productive, more profitable company. Given the changing industry landscape, we believe this combination is the logical next step for Longs. CVS Caremark has a strong record of successfully integrating drug store chains and pharmacy benefit services into its portfolio and working with employees to strengthen the performance, format and offerings of stores. We believe this will present excellent opportunities for our employees and ensure that our customers continue to receive excellent pharmacy care and high quality products."
In addition to Longs' retail operations including three distribution centers and corporate offices, CVS will also acquire the company's Rx America subsidiary, which offers prescription benefits management (PBM) services to over eight million members.
Discussion Questions: What is your reaction to CVS Caremark acquiring Longs? What will this mean for the two companies and those that will have to compete with them after the deal is completed?