CVS Buys 1,660 Pharmacies from Target, Ties Walgreens in Store Count

Jo-Carolyn Goode | 6/15/2015, 3:24 p.m.
After this acquisition, CVS ties, by some measures tops, Walgreens as the U.S. largest pharmacy store counted by stores with ...

What: CVS Health Corporation and Target Corporation announced that CVS Health is to acquire Target's pharmacy and clinic businesses for approximately $1.9 billion. Through this agreement, CVS Health will acquire Target's more than 1,660 pharmacies across 47 states and operate them through a "store-within-a-store" format, branded as CVS/pharmacy. In addition, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services.

Why it matters: After this acquisition, CVS ties, by some measures tops, Walgreens as the U.S. largest pharmacy store counted by stores with close to 8,000 stores. Consolidation has been a trend in this sector with CVS Caremark, Walgreens and Rite Aid clearly leading in store count. By acquiring the Target pharmacies CVS gains more stores to market, particularly through its circular program which is direct mailed, inserted in newspapers and also circulated in digital format.

CVS Health Corporation and Target Corporation announced that they have entered into a definitive agreement for CVS Health to acquire Target's pharmacy and clinic businesses for approximately $1.9 billion. Through this agreement, CVS Health will acquire Target's more than 1,660 pharmacies across 47 states and operate them through a store-within-a-store format, branded as CVS/pharmacy. In addition, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services. Target's nearly 80 clinic locations will be rebranded as MinuteClinic, and CVS Health will open up to 20 new clinics in Target stores within three years of the close of the transaction. The new clinics will be part of CVS/minuteclinic's plan to operate 1,500 clinics by 2017. In addition, CVS Health and Target plan to develop five to 10 small, flexible format stores over a two-year period following the deal close, which will each be branded as TargetExpress and include a CVS/pharmacy.

CVS Health is committing to offering the approximately 14,000 in-store Target health care professionals comparable positions with CVS Health as part of the transition.

Portada asked Chip Weinstein, CEO of Prime Access, a NYC based agency with strong healthcare and pharma expertixe, to evaluate the deal. “What a great move this is for both Target and CVS. Target is one of the more authentic brands out there. They’ve smartly aligned with CVS and will now have a much stronger in-store offering as they move toward becoming wellness experts. This alliance will also allow them to focus on the other aspects of their business that have made them successful. CVS can now reach customers in an environment that appeals to their overall lifestyle. The integration of the two landscapes will be fascinating to watch.”

CVS can now reach customers in an environment that appeals to their overall lifestyle. The integration of the two landscapes will be fascinating to watch.

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