Target selling its pharmacies to CVS Health for $1.9 billion
Target’s (TGT) pharmacies will soon all become CVS locations.
The discount retailer and CVS Health (CVS) announced a deal worth $1.9 billion Monday under which Target will sell its 1,660 pharmacies and 80 clinics, which will be rebranded as CVS/pharmacy and MinuteClinic locations. These will be operated as “stores within a store.”
For Target, the deal gives it cash injection a few months after it took a $5 billion write down on its aborted Canadian business, and the deal lets it concentrate on its e-commerce and core retail businesses. It will also allow it to improve its health and wellness offerings, a key prong in Target CEO Brian Cornell’s strategy for rejuvenating its business.
As for CVS Health, the deal allows it to expand its retail footprint by hundreds of locations as it competes with Walgreens (WBA), currently the largest U.S. drugstore operator. In particular, it will get a stronger presence in key markets such as Seattle, Denver and Salt Lake City. CVS/pharmacy currently has 7,800 drugstores (Walgreens has more than 8,000.)
CVS Health said it will open as many as 20 new clinics in Target stores within three years of the close of the deal, part of its plan to operate 1,500 MinuteClinics by 2017. Target plans to build out five to 10 small, flexible format stores within two years under the TargetExpress name. Those will include a CVS/pharmacy.
“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,” Brian Cornell, Target Chairman and CEO, said in a statement.