By Chelsey Dulaney
CVS Health Corp. agreed to buy pharmacy-services provider
Omnicare Inc. for $10.4 billion, in a move aimed at boosting the
drugstore chain's business with nursing homes and senior-living
facilities.
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 1.5% to $102.75 in premarket trading, while
Omnicare's shares increased 1.2% to $95.80.
CVS said the deal would 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.
The deal also increases CVS Health's presence in a rapidly
growing specialty pharmacy business. Omnicare helps to market,
distribute and obtain reimbursement for high-price drugs typically
aimed a small patient populations. This segment represents more
than a quarter of Omnicare's total revenue.
In 2014, Omnicare's specialty care segment had revenue of $1.67
billion, up 20% from the year before. Sales at the company's
long-term care group added 2.6% to $4.75 billion.
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 benefits.
The deal, subject to regulatory approval, is expected to close
near the end of the year.
The agreement is the latest in a string of acquisitions related
to how drugs are sold and distributed. The industry also has seen
merger activity among pharmacy-benefit managers, or PBMs, which
negotiate for medicines on behalf of employers and health
plans.
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.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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