CVS Buying Caremark for About $21.2B

Customers take advantage of the drive through pharmacy window outside a CVS drug store in a Bainbridge Twp., Ohio file photo from Aug. 3, 2006. Prescription benefits manager Caremark Rx Inc. and drugstore chain CVS Corp. said they are in talks about a combination of the companies. The companies said in a statement that they are discussing a possible "merger of equals" transaction. (AP Photo/Amy Sancetta, File) (Amy Sancetta - AP)

The new company will be called CVS/Caremark Corp. and will be headquartered in Woonsocket.

The pharmacy services business will remain based in Nashville. Combined 2006 revenue for the companies are expected total about $75 billion, a joint statement said.

Caremark's Crawford will become the chairman of the combined company and Ryan will become president and chief executive of the combined company.

After the markets closed Wednesday, CVS reported its third-quarter profit rose 13 percent on higher same-store sales.

Net income grew to $280.7 million, or 33 cents per share, from $249.2 million, or 30 cents per share, a year ago.

Revenue rose 25 percent to $11.21 billion.

Analysts surveyed by Thomson Financial expected earnings per share of 32 cents on revenue of $11.24 billion.

Caremark reported a 25 percent increase in third-quarter profit on strong sales in the company's mail-order and retail businesses.

Net income grew to $288.6 million, or 67 cents per share, from $231.4 million, or 51 cents per share, a year ago.

Revenue rose 13 percent to $9.14 billion.

Analysts expected earnings per share of 63 cents on revenue of $9.23 billion.

Glenn Garmont, an analyst with First Albany Corp., said before the announcement that the deal was likely spurred in part by the fear that Wal-Mart, "will emerge as a fierce new competitor following its introduction of selected $4 generic drugs."