Tracy Press

 
CVS Caremark buys stores on the West Coast, including Tracy.

The Longs Drugs on 11th Street near Corral Hollow Road is one of two stores in Tracy that’s sold. Glenn Moore/Tracy Press

For Tracy’s two Longs Drugs stores — one on 11th Street and one on Tracy Boulevard — it’ll be business as usual through the end of the year, Longs vice president and chief financial officer Steven McCann said this week.

So except for a new storefront sign sometime next year, the products, employees and layout will remain similar to the way it is now, he said.

“The last quarter tends to be our busiest time of year,” he said, “So I imagine they’ll keep things the same and not do the name change until next year.”

In Northern California, he added, there tends to be very few CVS and Longs Drugs stores in the same retail vicinity, so it’s unlikely that more than a few Longs stores will close.

In Tracy, McCann said, that means both branches are likely to remain open, and it’s unlikely there will be any layoffs.

The $71.50 per-share cash offer, announced after the end of trading Tuesday, was a 32 percent premium over Walnut Creek-based Longs’ closing price of $54.04.

Longs’ shares soared 30 percent — or $16.21 — to $70.25 in after-hours trading.

Including the assumption of the chain’s roughly $200 million in debt, the deal is valued at about $2.9 billion.

Executives at Woonsocket, Rhode Island-based CVS, said the acquisition will give the nation’s largest provider of prescriptions significant inroads in fast-growing West Coat markets where property is often unavailable or expensive to acquire.

"Geographic reach has become a more important thing for us," CVS chief financial officer David Rickard said in an interview. "CVS has always wanted to be in good markets that grow, and if you look at population centers of the United States, we're in most of them. ... This directly addresses the central and northern California markets and gives us access to those consumers."

The deal is expected to close in the fourth quarter.

Longs operates 521 drugstores — mostly in California — but also has sites in Hawaii, Nevada and Arizona. The company also owns Rx America, a prescription benefits management program with more than 8 million members.

CVS executives said building such a portfolio could take the pharmacy chain a decade to complete, while spending hundreds of millions to acquire on property.

"These are highly attractive regions of the country, where we are not currently represented," CVS chairman and chief executive Tom Ryan told investors during a conference call. "And they are very difficult real estate markets to penetrate."

The Longs stores in the continental United States will be converted to the CVS brand in 2009, while sites in Hawaii will retain the Longs' name for the foreseeable future.

After the acquisition is completed, CVS will operate 6,800 drugstores in 41 states and the District of Columbia.

"Given our changing industry landscape, we believe this combination is the logical step for our company," said Warren F. Bryant, chairman and CEO of Longs.

Longs’ stock has climbed since the spring amid speculation the company would seek an outright sale or alternatives for its real estate portfolio.

During the second quarter, the company's same-store sales fell 1.1 percent as more generic drugs flooding the market ate into profits. Meanwhile, total sales increased 0.5 percent to $1.2 billion.

Year-to-date, Longs said its same-store sales declined 0.1 percent, but total sales increased 1.7 percent.

CVS shares fell 49 cents — or 1.3 percent — to $38.05 in trading Tuesday, before falling $1.67 — or 4.4 percent — to $36.38 in after-hours activity.

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written by UCoty , August 16, 2008

I am surprised that SaveMart isn't all upset and threatening to sue, grandstanding in front of city council, etc.
CVS is just a name change really, I have been to CVS back on the East Coast. It appears they run a good business. Could be worse, could be Piggly Wiggly.