CVS Corp. announced it entered into a definitive agreement to acquire approximately 1,260 Eckerd drug stores from J.C. Penney Co. Inc. The cash transaction is valued at $2.15 billion and most of the stores are located in the southern United States.
Woonsocket-based CVS will be America’s leading pharmacy retailer with more than 5,000 locations in 36 states and the District of Columbia. CVS’ PharmaCare subsidiary will nearly double in size to more than $2 billion in annual revenues and will serve approximately 30 million. In total, CVS will fill approximately 13 percent of the nation’s retail prescriptions.
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The combined 2003 revenues of CVS Corp. and the operations it has agreed to acquire were approximately $33 billion.
J.C. Penney Co. Inc. signed agreements with CVS and The Jean Coutu Group of Canada for its Eckerd drugstore operations for a total of $4.525 billion in cash. The Jean Coutu Group will acquire Eckerd drugstores and support facilities located in thirteen Northeast and mid-Atlantic states, as well as the Eckerd Home Office in Florida, for $2.375 billion.
Tom Ryan, chairman, president and CEO of CVS, said the acquisition fits into the company’s long-term expansion strategies into the sun-belt markets.
“The demographics in these states are very favorable, as they are experiencing rapid population growth, particularly among seniors, resulting in pharmaceutical utilization rates among the highest in the nation,” he said. “CVS’ track record of significantly improving the performance of acquired operations will serve us well as we seek to improve the Eckerd stores we are acquiring. The portfolio is fundamentally sound, with valuable real estate and associates.”
