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CVS Health To Buy Omnicare For $12.7 Bln

CVS Omnicare 052115

Drugstore chain CVS Health Corp. (CVS), which changed its name from CVS Caremark Corp. in September last year, agreed Thursday to acquire pharmacy services provider Omnicare, Inc. (OCR) for $98 per share in cash, valued at $12.7 billion, including about $2.3 billion in debt. With this deal, CVS Health expects to expand its presence in the senior patient care market.

Omnicare, one of the nation's largest long-term care pharmacy provider, has been exploring sale since April.

The offer price of $98 per share represents a 27.2 percent premium over Omnicare's unaffected closing share price of $77.04 on April 20, the day prior to reports that its was exploring a sale.

Woonsocket, Rhode Island-based CVS, the biggest U.S. prescription drugs retailer, has secured $13 billion in fully committed unsecured bridge financing from Barclays and expects to put in place permanent financing in the form of senior notes and term loans before the closing of the deal.

CVS Health expects the deal to add about 20 cents to its adjusted earnings per share in 2016, its first full year, excluding acquisition costs.

The deal, approved by boards of directors of both companies, is scheduled to close near the end of 2015.

Both CVS and Omnicare are big players in Medicare Part D, a federal program that subsidizes medicine for retirees. Reports earlier stated that industry leader Express Scripts Holding Co. (ESRX) had also shown interest in Omnicare.

This year, in the pharmaceutical space, Rite Aid Corp. (RAD) had agreed to buy pharmacy benefits manager Envision Pharmaceutical Services or EnvisionRx, in a cash and stock deal valued at about $2 billion in mid-February. The deal is expected to close by September 2015.

Later, in March, Health insurer UnitedHealth Group Inc.'s (UNH) OptumRx agreed to acquire Catamaran Corp. (CTRX, CCT.TO) for $12.8 billion to create a large third-place competitor. The transaction is scheduled to conclude during the fourth quarter of 2015.

CVS closed Wednesday's regular trading session at $101.27, down $1.05 or 1.03% on a volume of 3.80 million shares, while OCR closed at $94.63, up $2.29 or 2.48% on a volume of 3.57 million shares.

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