NEW YORK (TheStreet) -- CVS Health (CVS) shares are up 1.96% to $103.22 in early market trading on Thursday after the retailer announced the purchase of nursing home pharmacy Omnicare (OCR) in a $12.7 billion deal, furthering CVS' position as the largest U.S. prescription drug retailer.
The Woonsocket, RI-based company will pay $98 per share in cash, a 21% premium over the stock's closing price yesterday. Omnicare has about 13,000 employees at 60 locations across the country.
Omnicare had reportedly been a takeover target by multiple companies including Express Scripts Holdings (ESRX), the U.S. biggest pharmacy-benefits management company, last month, according to media reports.
"The acquisition of Omnicare significantly expands our business, providing CVS Health access into a new pharmacy dispensing channel. It also creates new opportunities for us to extend our high-quality, innovative pharmacy programs to a broader population of seniors and chronic care patients as they transition across the care continuum. We have been impressed by the Omnicare team and what they have created for the patients they serve," said CEO Larry Merlo.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio, today said that the purchase is a "Brilliant move by Larry Merlot to capture an unserved cohort-seniors!"
CVS identified long term care as a growth segment in the healthcare sector due to an aging U.S. population.
Both companies board of directors have approved the deal and the transaction is expected to close by the end of this year.
Omnicare shares are up 1.34% to $95.90 in early market trading today.