New York City, Standard Poor's Ratings Services said it placed its long-term ratings, including the “BBB+” long-term corporate credit rating, on CVS on CreditWatch with positive implications. The “A-2” short-term rating on the company was affirmed, though this rating was not placed on CreditWatch.
The CreditWatch action follows the chain drug retailer's announcement that it has entered into a definitive agreement to merge with Caremark Rx. Under the terms of the agreement, Caremark shareholders will receive 1.67 shares of CVS for each share of Caremark. Pro forma for the transaction, CVS' shareholders will own 54% of the combined company and Caremark's shareholders will own 46%.
The new company will be called CVS/Caremark Corp. The transaction is subject to stockholder approvals from both companies as well as regulatory approval, and is expected to close in six to 12 months.