Pharmacy company CVS Caremark (NYSE:CVS) announced on Friday it will acquire Universal American’s (NYSE:UAM) Medicare Part D prescription drug business, doubling the size of CVS’s holdings in the program. Currently, Universal American's Part D until has around 1.9 million members, while CVS Caremark has 1.2 million members.
The $1.25 billion deal caused Universal American’s stock to jump 40% to $20.48. Universal American said shareholders will gain somewhere between $12.80 to $13 per share in cash once transaction expenses are paid.
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Under the terms of the deal, CVS will acquire Universal American’s outstanding stock and offer shareholders 100% of the newly formed public company. The deal is expected to close in the second quarter.