Tuesday, August 12, 2008


CVS Caremark to Purchase Longs Drug for $2.7 Billion (Update3)

By Lauren Coleman-Lochner

Aug. 12 (Bloomberg) -- CVS Caremark Corp., the second- biggest U.S. drugstore chain, said it would buy Longs Drug Stores Corp. for $2.7 billion to expand its reach in the western U.S., closing the gap with larger Walgreen Co.

Longs Drug has 521 locations in California, Hawaii, Nevada and Arizona, giving CVS about 6,800 stores, in line with Walgreen, the Deerfield, Illinois-based chain with 6,849.

  • CVS has been on a acquisition tear for quite a few years
  • Walgreen's and CVS will have essentially equal number of locations if this dal happens.
  • They seek to grow their store count
  • This will allow for more efficient use of existing assets. Trucks, warehouses, distribution centers etc.
It will be interesting to see if there is antitrust scrutiny on this deal. CVS could make a strong case that all the supermarkets [most of which have in store pharmacies] that there will still be strong competitors after the deal.

What are your thoughts?

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