Universal American Ends Day Up 40% On News Of $1.25 Billion CVS Caremark Deal (UAM, CVS)

Shares of Universal American Financial Corp.

ended the day up 40% at $20.45 per share. Universal American Financial Corp announced early on Friday morning that it had agreed to sell its medicare prescription drug business to CVS Caremark Corporation

. The agreement calls for CVS Caremark Corporation to pay $1.25 billion plus the excess capital in the entities that operate the medicare prescription drug business, estimated at $150 million, less Universal American's outstanding debt and trust preferred securities, estimated at $340 million. The shareholders of Universal American should expect to receive about $12.80 to $13.00 per share in cash. Today's trading range for shares of Universal American Financial Corporation was between $19.71 and $20.70 per share. The consensus price target of analysts covering the company's stock was $17.00 per share. Volume of 4.3 million shares was far above the daily average volume of 168,000 shares. Richard Barasch, chairman and chief executive officer of Universal American Financial Corporation, said, “We are very proud of the Medicare Part D business that we have built since the inception of the program and this transaction reflects our success. The scale and efficiencies generated by combining these plans should result in more value to our members and to our partners in the government.” Universal American Financial Corporation, through its family of healthcare companies, offers health benefit plans designed to promote collaboration among our members and their healthcare professionals. Read more