CVS to buy Longs for $2.9 billion

CVS Caremark Corp., the second-biggest U.S. drugstore chain, said it would buy Longs Drug Stores Corp. for $2.9 billion, including debt, to expand its reach in the western U.S.

Longs Drug investors will receive $71.50 a share, the companies said today in a statement. That's 32 percent more than Longs Drug closed at in New York trading before the announcement.

CVS Chief Financial Officer David Rickard said in a 2006 interview that the drugstore chain wanted to expand its presence on the West Coast and was open to doing so through acquisitions. Longs Drug has 521 locations in California, Hawaii, Nevada and Arizona.

William Ackman's Pershing Square Capital Management LP said last week that it took an 8.8 percent stake in Longs Drug.

CVS, based in Woonsocket, Rhode Island, fell 49 cents, or 1.3 percent, to $38.05 at 4:15 p.m. in New York Stock Exchange composite trading before the announcement. The shares have declined 4.3 percent this year. Longs Drug, based in Walnut Creek, Calif., dropped $1.07, or 1.9 percent, to $54.04.