By Chelsey Dulaney
CVS Health Corp. agreed to buy pharmacy-benefits provider
Omnicare Inc. for $10.4 billion, in a move aimed at boosting the
drugstore chain's services for the growing senior patient
population.
The offer for $98 a share in cash is a 3.6% premium to
Omnicare's closing price on Wednesday. The total deal is valued at
$12.7 billion, when including $2.3 billion in debt.
Shares of CVS gained 1.9% in premarket trading, while Omnicare's
shares gained 1%.
CVS said the deal will increase its ability to dispense
prescriptions in assisted-living and long-term-care facilities.
"The acquisition of Omnicare significantly expands our business,
providing CVS Health access into a new pharmacy dispensing
channel," CVS Health Chief Executive Larry Merlo said in a news
release.
CVS expects the deal will add 20 cents to its adjusted per-share
earnings next year and become increasingly accretive after that.
CVS also said it expects to see revenue synergies.
The deal, subject to regulatory approval, is expected to close
near the end of the year.
The deal is the latest in a string of acquisitions of
pharmacy-benefit managers, or PBMs. PBMs negotiate for medicines on
behalf of employers and health plans. They have placed pressure on
drugstores by negotiating for lower prices on behalf of their
clients and via mail-order plans that compete for prescription
business.
In March, UnitedHealth Group Inc. agreed to acquire Catamaran
Corp., the fourth-largest pharmacy-benefit manager in the U.S. by
volume of prescriptions processed, for $12.8 billion in cash. The
deal was seen helping UnitedHealth to bulk up its pharmacy-benefit
business amid growing concern from employers and insurers about the
rising costs of cutting-edge drugs.
In February, Rite Aid Corp. agreed to buy pharmacy-benefit
manager Envision Pharmaceutical Services for about $2 billion from
investment firm TPG.
Bloomberg on Wednesday had reported on the talks between CVS and
Omnicare.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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