Drugstore operator CVS Corp. announced Wednesday it is buying pharmacy benefi ts manager Caremark Rx for about $21.2 billion in stock.
The deal, which the companies described as a “merger of equals,” would create a $75 billion drug distribution powerhouse that could compete more effectively for customers and drive a harder bargain with drugmakers.
Caremark has nearly 2,600 Arizona employees — 2,100 at its Scottsdale campus and 460 at its Mail Service Pharmacy operation at the Cotton Center in Phoenix, said company spokesman Dale Thomas.
He added, ”It’s premature to say” what impact the merger would have with local operations.
CVS has 119 pharmacies in Arizona, 45 of them in or near the East Valley since CVS purchased local Oscos. CVS also has some administrative offices in the Valley.
But investors sent shares of both companies lower, and some analysts raised concerns about integrating the two businesses.
CVS shares tumbled $2.32, or 7.4 percent, to close at $29.06 on the New York Stock Exchange while Caremark lost $1.06, or 2.2 percent, to fi nish at $48.17. Caremark shareholders will be getting CVS stock in the deal.
But SunTrust Robinson Humphrey analyst David Magee wrote in a note to clients that the deal could be seen as too much risk for CVS which is still digesting acquisitions from the past couple of years, including purchasing the Sav-On drug store chain, which was made earlier this year. He also wrote the deal could distract CVS from developing growth from its existing business lines.
Still, he said the he was cautiously optimistic about the long-term implications of the deal because of the size and buying power of the new company.
Company officials said the deal would create signifi cant benefi ts for employers and health plans through more effective cost management and new programs, and for consumers through expanded choice and more personalized services.
Combining Caremark’s expertise in serving employers and health plans with CVS’s expertise in serving consumers will create a powerful force for change in pharmacy services, said Edwin Mac, Crawford, chairman, CEO and president of Caremark, based in Nashville, Tenn.
In the deal, Caremark shareholders will receive 1.67 shares of Woonsocket, R.I.-based CVS for each share of Caremark. CVS shareholders will own 54.5 percent of the combined company, and Caremark shareholders will own 45.5 percent.