CVS Health has agreed to acquire Target's (NYSE:TGT) pharmacy and clinic business for $1.9 billion. Through the agreement, CVS Health (NYSE:CVS) will acquire more than 1,660 pharmacies across 47 states and operate them as stores within stores. In addition, Target's 80 clinics will be rebranded as MinuteClinics.
CVS plans to open 20 new clinics in Target stores within three years, with an overall goal of operating 1,500 clinics by 2017. The use of retail clinics is growing in the United States, reaching a recent milestone of 10 million annual visits.
As part of the deal, the two retailers will develop between five and 10 small format stores over a two-year period, which will be branded as TargetExpress stores with a CVS pharmacy inside.
The transaction enables CVS Health to reach more patients through a new retail channel. And for Target, the transaction is expected to benefit the long-term traffic and sales growth. It also allows Target to focus on growth in the health and wellness category.
"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said Larry Merlo, CVS Health president and CEO. "When we introduced the new name for our company, CVS Health, we began a new era of growth with a broader health care focus and an appreciation of the rise of health care consumerism with consumer choice and accountability growing."
Once the transaction is complete, Target shoppers will have access to CVS Health programs, including Pharmacy Advisor, Specialty Connect and Maintenance Choice, which will help consumers achieve better medication adherence. In addition, the locations will have a low cost generic drug option to cash-paying guests.
"At Target, we've talked a lot about the evolving preferences of our guests and this partnership demonstrates that we're committed to putting them at the forefront of everything we do," said Brian Cornell, Target chairman and CEO. "By partnering with CVS Health, we will offer our guests industry leading health care services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests."
The transaction is subject to regulatory clearance, and then the changes will be rolled out over a period of several months. CVS Health is offering 14,000 employee positions to Target health care professionals as part of the transition.
-See this CVS/Target press release
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