S&P May Downgrade CVS Ratings on $1 Billion 700 Store Buy-Leaseback of Sav-on and Osco Drug Stores from Albertson's

Morningstar / MarketWatch Pulse - January 23, 2006

Standard & Poor's Ratings Services on Monday placed CVS Corp.'s (CVS) long-term ratings, including its A- long-term corporate credit rating, on creditwatch with negative implications. S&P also affirmed the A-2 short-term rating on the Woonsocket, R.I.-based retail pharmacy chain. The creditwatch action follows the retailer's agreement to acquire about 700 stores under the Sav-on and Osco banners from Albertson's Inc. (ABS) for $3.9 billion in cash, including property. CVS is planning on funding the transaction with short- and long-term debt, including an anticipated sale leaseback of $1 billion. "Although the proposed transaction would strengthen CVS's competitive position, the additional debt to fund the acquisition would weaken the company's financial profile," said S&P credit analyst Diane Shand in a statement. Sphere: Related Content