CVS Health (NYSE:CVS), the second-largest U.S. drugstore operator, said today it will buy Omnicare (NYSE:OCR), the top U.S. provider of pharmacy services to the elderly, for $10.1 billion to expand in the growing market serving the senior patient population.
CVS will pay $98 per share in cash and assume $2.3 billion of Omnicare's debt, the companies said in a statement today.
Shares of Omnicare rose 1.4 percent at $95.91 at 9:54 a.m. in New York, while shares of CVS rose 2.5 percent to $103.77.
Omnicare has 160 locations in assisted living and long-term care facilities in 47 states in the U.S. It has about 13,000 employees.
Omnicare also provides pharmacy consulting and runs another segment that provides specialty pharmacy services.
Specialty drugs are complex medications that treat certain forms of cancer or hepatitis C, among other conditions. They often represent treatment breakthroughs but can cost considerably more than other prescriptions. Use of these drugs is climbing, and insurers and employers are looking for help containing that cost.
"The acquisition of Omnicare significantly expands our business, providing CVS Health access into a new pharmacy dispensing channel," CVS Health CEO Larry Merlo said in a statement.
The deal is expected to close "near the end of 2015."
The deal will dramatically add to CVS' revenue next year, and Integrating the companies also will lead to savings in purchasing and other operations, Woonsocket, Rhode Island-based CVS said. It will contribute about 20 cents to its earnings per share next year, after excluding one-time transaction-related costs. CVS Health runs more than 7,800 locations.
The deal comes at a time when pharmacy benefit managers and pharmacy chain operators are consolidating to negotiate better prices with drugmakers. Rite Aid bought pharmacy benefit manager EnvisionRx for about $2 billion in February, while health insurer UnitedHealth Group agreed to buy Catamaran for about $12.8 billion in March.
Barclays and Evercore are CVS's financial advisers, while Bank of America Merrill Lynch and Centerview Partners advised Omnicare.