Kind of an interesting deal. $1.9B and rent to Target and CVS takes over pharmacy operations (filling prescriptions plus apparently the rest of the section - in other words, store-within-a-store) completely in 1,660 target stores (plus 80 TGT clinics.) Additionally, CVS will be within future Target Express smaller stores and future TGT super centers.
http://www.marketwatch.com/story/cvs-deal-to-buy-targets-pharmacies-is-a-win-win-2015-06-15"Kantar’s Owens said the transaction will increase the 1.7 billion prescriptions already filled or managed by CVS annually, making it the largest of all the U.S. drugstore chains. Target fills 96 million prescriptions annually, according to CVS.
CVS, the No. 2 pharmacy-benefits manager in the U.S. after Express Scripts, will likely become the leader after the Target deal. “More people are going to fill their prescriptions at CVS than before,” Owens told MarketWatch."
Comments
Express Scripts acquired Medco (formerly owned by Merck), both PBMs in 2012.
But Express Scripts Holding (ESRX) and CVS Health Corporation (CVS) are two separate, publicly traded corporations.
Perhaps you're confusing a possible Express Scripts buyout with various ebbs and flows that Express Scripts has had with Walgreen's, including Walgreen's not accepting Express Scripts coverage in 2011, that was resolved with Express Scripts designating Walgreens a preferred provider. Most recently (April) Walgreen's expressed interest in acquisitions, with speculation about it acquiring Express Scripts.
One detail I found interesting (in another report on the acquisition) is that CVS is reducing its stock buyback in order to be able to buy Target's pharmacy business. Showing that sometimes a company does have better things to do with its cash than inflate its stock price. On the other hand, it seems that Target has no idea what to do with cash, so it's increasing its buybacks.
Personally, I found that Target seemed to give better prices on drugs than I could find elsewhere (outside of Costco), so I'm not especially happy about the acquisition.
That situation really showed the power of Express Scripts and the effect that it had on something the size of Walgreens.
Could Walgreens buy Express Scripts? Anything can happen, but it would seem like a seriously expensive purchase for Walgreens.
All this deal chatter comes at a time when announced global health-care M&A volume is at its highest-level on record year to date with $280 billion billion in transactions, according to Dealogic. That’s up 26% from the same time period last year, which was the biggest year on record for health-care M&A by a wide margin.
http://blogs.wsj.com/moneybeat/2015/06/15/health-insurance-ma-investors-look-for-the-next-takeover-target/
Health care funds continue to lead.
Health: Total Returns
http://news.morningstar.com/fund-category-returns/health/$FOCA$SH.aspx
http://etfdb.com/type/sector/healthcare/#returns
http://www.bloomberg.com/news/articles/2015-06-16/unitedhealth-said-to-have-approached-aetna-about-takeover-wsj
I'm sure giant consolidation in this sector of healthcare will only help bring insurance costs down....