Will the Target/CVS pharmacy deal lead to a future merger?
Target and CVS Health have reached a definitive agreement for the drugstore chain to acquire the mass merchant’s pharmacies and in-store clinics for a deal valued at $1.9 billion.
If federal regulators approve the deal, it will mean:
- CVS will operate pharmacies inside 1,660 Target stores;
- Target’s roughly 80 in-store clinics will be rebranded as MinuteClinic;
- CVS will open another 20 clinics inside of Target stores within three years of the deal’s close;
- The five to 10 TargetExpress stores planned over the next couple of years will include a CVS pharmacy.
In addition to expanding its presence in existing markets, the deal will move CVS into new ones, including Denver, Portland, Salt Lake City and Seattle.
"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said Larry Merlo, CVS Health president and CEO, in a statement. "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."
Aside from an influx of cash, Target sees the deal allowing the company to concentrate on growing its core business. Target CEO Brian Cornell previously made the decision to abandon the company’s Canadian business after it lost around $2 billion in two years.
"We’ve talked a lot about the evolving preferences of our guests and this partnership demonstrates that we’re committed to putting them at the forefront of everything we do," said Mr. Cornell in a statement. "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."
The two companies said the deal would open up the possibility for future joint projects. Will that extend to an eventual merger?
- CVS Health and Target Sign Agreement for CVS Health to Acquire, Rebrand and Operate Target’s Pharmacies and Clinics – CVS Health Corporation/Target Corporation
What will the CVS and Target deal mean for each company? Do you see talk about further joint projects opening up the possibility of a merger between the two companies?