CVS buyout of Osco puts competitors on the same team - East Valley Tribune: Business

CVS buyout of Osco puts competitors on the same team

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Posted: Saturday, August 5, 2006 7:23 am | Updated: 4:52 pm, Fri Oct 7, 2011.

A multimillion dollar corporate merger on Wall Street has resulted in a quirky scene at a Tempe intersection. At the southwest corner of Rural and Elliot roads sits a CVS drugstore while at the northeast corner sits an Osco drugstore.

Once head-to-head competitors carving out territory in the retail drugstore wars, the two are now brothers in arms as a result of CVS’s buyout of Osco earlier this summer.

“You knew that sooner or later, it had to happen,” said Jay Butler, a professor and director of the Arizona Real Estate Center at Arizona State University Polytechnic in Mesa.

“CVS has been fairly aggressive in taking out Eckerd and they bought Osco out. Osco had been changing from doing free-standing stores to being inside their sister store Albertsons,” Butler said.

In June, CVS based in Woonsocket, R.I. purchased 700 Osco and Sav-On drugstores as part of the liquidation of the Albertsons grocery chain.

The Boise, Idaho-based grocer was dismantled in a three-way $17 billion deal that included CVS, Super-Valu and an investment group that is to run 655 supermarkets, including the Arizona Albertsons grocery chain.

While nine Albertsons will close in the Valley, including five in the East Valley, the remainder are expected to continue operation.

Meanwhile, CVS’ acquisition of the Osco stores is not surprising to industry watchers. CVS has been in expansion mode for the past several years.

In 2004, CVS bought the Eckerd drugstore chain, adding more than 1,200 stores to its operations. As a result of the two buyouts, CVS is now the nation’s largest pharmacy retailer and has more than 6,100 stores in 34 states.

“There’s been a lot of consolidation across the board, whether it’s department stores or drugstores,” said Patrice Duker, spokeswoman for the International Council of Shopping Centers. “If you as a company have the ability to acquire a competitor, it’s certainly advantageous,” Duker said.

Patricia Gomez of Tempe thought the outcome of the corporate maneuverings odd. “I can’t figure it out — why there’s two here,” Gomez said outside the Osco at the Tempe intersection.

“I think I go to this one because it was here first.”

Steve Kniffin, of Tempe, said he prefers the former Osco across the street, but was lured to the CVS because of his sweet tooth. “They had these on sale,” Kniffin said.

Erin Pensa, CVS spokeswoman, wouldn’t comment on why the firm continues to operate two stores directly opposite each other.

Although all of the Oscos will be renamed and converted to CVS stores, Pensa declined to say whether one or both of the stores at the intersection will close as a result of the buyout.

“Because the acquisition is so recent, we’re still reviewing all the locations to decide how we’re going to handle it. For the time being, they’re still going to be there,” Pensa said.

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