CVS Caremark Corporation (CVS)

Recent Development

On November 1, 2006, we entered into a definitive agreement and plan of merger with Caremark Rx, Inc., (“Caremark”). The agreement is structured as a merger of equals under which Caremark shareholders will receive 1.670 shares of common stock, par value $0.01 per share, of CVS for each share of common stock of Caremark, par value $0.001 per share, issued and outstanding immediately prior to the effective time of the merger. The closing of the transaction, which is expected to occur in six to twelve months, is subject to approval by the shareholders of both CVS and Caremark, as well as customary regulatory approvals, including review under the Hart-Scott-Rodino Act.

Recent Development

On January 22, 2006, we entered into a definitive agreement under which we will acquire approximately 700 standalone Sav-on and Osco drugstores, as well as a distribution center located in La Habra, California, from Albertson’s, Inc. (“Albertson’s”), for $2.93 billion in cash immediately preceding the planned merger of Albertson’s and Supervalu, Inc. (“Supervalu”). Approximately half of the drugstores are located in southern California, with others in our existing markets in numerous states across the Midwest and Southwest. We will also acquire Albertson’s owned real estate interests in the drugstores for $1.0 billion in cash. Closing of the transaction, which is expected to occur in mid-2006, is subject to review under the Hart-Scott-Rodino Act, as well as other customary closing conditions. Further, closing is also conditioned on consummation of the merger between Albertson’s and Supervalu, which is also subject to review under the Hart-Scott-Rodino Act and other customary closing conditions, as well as approval by the shareholders of cash, short-term and long-term debt and proceeds from the subsequent sale-leaseback of the owned real estate interests. Closing of the transaction is not subject to such financing.

RECENT DEVELOPMENT

On January 22, 2006, we entered into a definitive agreement under which we will acquire approximately 700 standalone Sav-on^® and Osco^® drugstores, as well as a distribution center located in La Habra, California, from Albertson’s, Inc., (“Albertson’s”) for $2.93 billion in cash immediately preceding the planned merger of Albertson’s and Supervalu, Inc. (“Supervalu”). Approximately half of the drugstores are located in southern California, with others in our existing markets in numerous states across the Midwest and Southwest. We will also acquire Albertson’s owned real estate interests in the drugstores for $1.0 billion in cash. Closing of the transaction, which is expected to occur in mid-2006, is subject to review under the Hart-Scott-Rodino Act, as well as other customary closing conditions. Further, closing is also conditioned on consummation of the merger between Albertson’s and Supervalu, which is also subject to review under the Hart-Scott-Rodino Act and other customary closing conditions, as well as approval by the shareholders of Albertson’s and Supervalu. We expect to finance the transaction through a combination of cash, short-term and long-term debt and proceeds from the subsequent sale-leaseback of the owned real estate interests. Closing of the transaction is not subject to such financing.

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