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CVS Caremark

(CVS) - Get CVS Health Corporation Report

agreed to buy

Longs Drug Stores

(LDG)

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in a deal worth $2.9 billion, including assumed debt.

After Tuesday's close, CVS said it would pay $71.50 for each share of Longs, a 32% premium to its latest closing price of $54.04. In the past year, Longs has traded between $36.65 and $58.54.

With the acquisition, CVS will get Longs' 521 retail drug stores in California, Hawaii, Nevada and Arizona, as well as its Rx America subsidiary, which offers prescription benefits management services to more than 8 million members and prescription drug plan benefits to approximately 450,000 Medicare recipients.

Assuming the companies complete the transaction in the fourth quarter, CVS expects the purchase to dilute its earnings per share in the first year and to start adding to its profits in 2010.

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This article was written by a staff member of TheStreet.com.