WOONSOCKET, R.I., AND WALNUT CREEK, CALIF. — In one of the largest retail acquisitions of the year, Longs Drug Stores Corp. has agreed to be acquired by CVS Caremark Corp. for $2.9 billion or $71.50 per share. Included in the purchase price is the assumption of Longs net debt.
Woonsocket, R.I.-based CVS will acquire Longs’ 521 retail drugstores located in California, Hawaii, Nevada and Arizona, as well as its Rx America subsidiary. Longs also owns the real estate associated with approximately 200 store locations, three distribution centers and three office facilities. The store locations alone have been valued at more than $1 billion. CVS plans to monetize a substantial portion of these assets over time.
Warren Bryant, chairman, president and CEO of Longs, says he believes the acquisition will provide their customers with top-notch service and products.
“Over the course of the last 5 years, we have transformed Longs into a stronger, more productive, more profitable company,” he says. “Given the changing industry landscape, we believe this combination is the logical next step for Longs. CVS Caremark has a strong record of successfully integrating drug store chains and pharmacy benefit services into its portfolio and working with employees to strengthen the performance, format and offerings of stores. We believe this will present excellent opportunities for our employees and ensure that our customers continue to receive excellent pharmacy care and high-quality products.”
CVS Caremark plans to finance the acquisition with a $1.5 billion bridge loan facility, together with existing cash and liquidity, which will provide them with sufficient funding to satisfy its obligations for the acquisition.
Lehman Brothers and Deutsche Bank served as financial advisors to CVS Caremark and provided the bridge loan commitment for the transaction. Davis Polk & Wardwell and Mintz Levin Cohn Ferris Glovsky and Popeo P.C. served as legal advisors to CVS Caremark. J.P. Morgan Securities served as financial advisor to Longs, and Wachtell, Lipton, Rosen & Katz served as its legal advisor.
The acquisition is expected to be completed fourth quarter 2008.