The ratings on Woonsocket, R.I.-based CVS Corp. were placed on CreditWatch with negative implications on Jan. 23, 2006, following the company's announcement that that it had entered into a definitive agreement to acquire approximately 700 stores under the Sav-on and Osco banners from Albertson's Inc. for $3.9 billion in cash (including the property). CVS is planning on funding the transaction with short- and long-term debt, including an anticipated sale leaseback of $1.0 billion. The CreditWatch placement reflects the increased business risk related to the acquisition, as CVS will be integrating a large number of stores while it is still in the process of improving the profitability of the more than 1,000 Eckerd stores that it acquired from J.C. Penney Co.
