CVS Acquires Target’s Pharmacies and Clinics
Target Corp and CVS Health Corp. have entered into an agreement for CVS to acquire Target's pharmacy and clinic businesses for about $1.9 billion. Under the agreement, CVS will acquire Target's more than 1,660 pharmacies in 47 states and operate them in a store-within-a-store format, branded as CVS/pharmacy.
Additionally, a CVS/pharmacy will be included in all new Target stores offering pharmacy services. Target's almost 80 clinic locations will be rebannered as MinuteClinic, and CVS will open as many as 20 new clinics in Target stores within three years of the close of the deal. The new clinics will be part of CVS/minuteclinic's plan to operate 1,500 clinics by 2017. Further, CVS and Target plan to develop five to 10 small, flexible-format stores over a two-year period following the close of the transaction, each to be branded as TargetExpress and including a CVS/pharmacy. The deal also extends CVS' retail presence to Seattle; Denver; Portland, Ore.; and Salt Lake City.
"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," noted Larry Merlo, president and CEO of Woonsocket, R.I.-based CVS, which operates 7,800 retail drug stores and almost 1,000 walk-in medical clinics. "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. This relationship with Target will provide consumers with expanded options and access to our unique health care services that lead to better health outcomes and lower overall health care costs."
"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," added Brian Cornell, chairman and CEO of Minneapolis-based Target, which has 1,795 stores. "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."
After the deal closes, Target shoppers will have access to CVS Health's pharmacy care programs and medical clinic services, among them Pharmacy Advisor, Specialty Connect and Maintenance Choice, as well as a low-cost generic drug option for cash-paying customers. The MinuteClinic locations at Target stores will provide patients with improved access to affordable medical care, while CVS customers will be able to take advantage of a one-stop shopping experience, including apparel, home and fresh food, when seeking health care services.
As part of their new relationship, Target and CVS Health will evaluate and select locations best-suited for small-format Target stores with a CVS/pharmacy, and look into groundbreaking, new-market offerings with the potential to generate strong returns on investment and offer long-term benefits for customers and communities.
The deal is subject to customary closing conditions, including necessary regulatory clearance, with in-store changes to be introduced over a period of several months following its completion. Additionally, CVS will offer about 14,000 in-store Target health care professionals comparable positions with CVS as part of the transition.