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Wednesday, November 27, 2013

CVS Agrees to Buy Aprias Coram Unit for $2.1 Billion

Author: Matt Townsend

CVS Caremark Corp. (CVS), the largest provider of prescription drugs in the U.S., agreed to buy Coram LLC from Apria Healthcare Group Inc. for about $2.1 billion to add specialty infusion services, its biggest deal in five years.

The acquisition won’t have a material impact on 2014 results and will add adjusted earnings of as much as 5 cents a share in 2015, Woonsocket, Rhode Island-based CVS said today in a statement. CVS, which also runs the second-largest U.S. drugstore chain, said the unit will have about $1.4 billion in revenue in the first 12 months after the transaction closes.

The deal will bring CVS into the business of providing therapies such as antibiotics, nutrition and pain medicine through needles or catheters into patients’ veins. Such drugs are a growing part of the pharmacy market, and CVS can help clients control health costs by offering them at Coram’s more than 85 locations nationwide instead of at costlier hospitals.

“They are moving into home infusion, which is a high-growth area,” Ross Muken, an analyst for ISI Group LLC in New York, said in an interview. In the next five years, several infusion treatments will become top-10 best-selling drugs while none currently are, he said. Muken recommends buying CVS shares.

The deal would be the largest for CVS since the company bought Longs Drug Stores for about $2.8 billion in 2008, beating Walgreen Co. in a bidding contest.

Drug Retail

The acquisition also is the third-largest in the North American drug-retail industry in the past five years, trailing Loblaw Cos.’s agreement to buy Shoppers Drug Mart this year and Walgreen’s purchase of a 45 percent stake in Alliance Boots GmbH last year.

CVS rose 1.1 percent to $66.84 at 11:48 a.m. in New York. The shares gained 37 percent this year through yesterday, outperforming the 26 percent increase in the Standard & Poor’s 500 Index while trailing the 61 percent advance of Deerfield, Illinois-based Walgreen.

Apria, a medical-equipment provider owned by Blackstone Group LP, purchased Denver-based Coram for $350 million in 2007.

Walgreen operates the largest U.S. drugstore chain.

Barclays served as CVS’s financial adviser on the deal, while Sullivan & Cromwell LLP served as legal adviser and Dechert LLP provided legal advice from an antitrust perspective.

To contact the reporter on this story: Matt Townsend in New York at

To contact the editor responsible for this story: Robin Ajello at




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