CVS and Walgreen

There has been a lot published about the sale of Albertson's, but this one is worth looking at, from The Boston Globe, because it looks at the deal primarily from the viewpoint of CVS, who I think may be the big winner.

CVS has built itself primarily by acquisition:

Major deals have included a 1997 merger with Revco DS that added about 2,500 stores in the Midwest and Southeast, and a 2004 purchase of 1,200 stores from Eckerd Corp. that broadened CVS's reach into Florida and Texas, which are filled with elderly consumers in need of medicines.

Last year, according to analysts, CVS trailed Walgreen's $42b to $37b (although they already led in number of stores). This acquisition may be enough to close the gap, since the 700 stores they acquired are estimated to do about $5.5b.

In most other retail categories, there is a leader with a decided edge on #2 (e.g., Best Buy/Circuit City, Home Depot/Lowes, Wal-Mart/Target). It will be fun to watch a battle between equals.