CVS Health Corp is all set to secure a purchase deal worth at $10.1 billion to acquire Omnicare Inc.
CVS Health Corp, the operator for drugstore stated recently that the company is all set to spend around $10.1 billion in order to buy Omnicare Inc. the company is known for supplying prescription along with medicines for the nursing department, health care facilities and assisted living.
This initiative by the company makes it the second largest drugstore operator in United States. The company has the access to the older United States population and works on modifying the specialty pharmacy. The purpose of this is to provide drugs that are suffering from chronic diseases whose treatment is relatively expensive.
CVS expects that this deal will help them in adding almost 20 cents to the adjusted earnings per share (EPS) in the fiscal year of 2016. The deal also comprises of a debt of almost 42.3 billion reported the firm.
The health care sector has been currently consolidating while firms have worked on bargaining for competitive prices along with beefing up the drug manufacturing process along with the three largest drug distributors situated in United States.
"There's a lot of purchasing scale. There's a lot more volume. They could renegotiate their supply contracts given the volume," said Steven Halper the analyst at FBR.
Apart from the sales of the mail order and drugstore chain, CVS also has the honor of being the second largest benefits manager in the US. This allows them to secure pricings for government plans and big employers.
CVS has currently offered $98 for each share of Omnicare. This shows that a premium of 4% is visible on the closing price. Omnicare is a reliable name in the health care sector that offers pharmacy related services to the elderly masses.
The company seeks to expand its pharmacy business with this deal and according to Reuters this offer is around 21 percent premium to Omnicare when they closed on April 21. It is a day before when Bloomberg mentioned that Omnicare is exploring a sale in the market. Furthermore, the shares of Omnicare in the market jumped to $96, an increase by 1.5 percent was noticed whereas CVS Health Corp shares rose 2.8 percent to $104.08. It was Bloomberg who broke the news regarding CVS’ plans to buy Omnicare in the coming times.
Apart from this, CVS has secured a financing deal from Barclays for about $13 billion. It is believed that all pharmaceutical companies are looking for purchases and mergers to bolster their portfolios regardless of the industry they are in.
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