CVS Merger Chain
In recent decades the United States has experienced a huge amount of consolidation. This consolidation appears to be driven by large private equity funds and REITs.
I believe that best way to examine the consolidation is by looking at some of the merger chains.
A company called CVS just acquired a huge insurance company called Aetna. They have an intriguing acquisition history.
The company started as a shoe store called "Melville." Their main brand was "Thom McCan." Melville grew to over a thousand stores and contracted to put shoe stores in KMart. This division is called Meldisco.
The company decided to create nationwide roll outs for other brands. They acquired "Kay-Bee Toys," "Bob's Store," "Linens 'n Things," "Marshalls" and CVS Pharmacy.
These discount stores had some internal conflict. Melville decided to break apart. The pharmacy had the highest profit margin. They changed their name to CVS and sold off their other divisions. They rename their shoe stores FootStar. It's primary brand was FootAction.
NOTE: KB Toys, FootStar and LNT ended up going bankrupt.
CVS expanded through new construction and acquisition.
The most interesting acquisition was of a rival consolidator called Revco.
Revco was aggressively merging pharmacy chains. With each merger the CEO diluted his control over the company. The CEO realized that his firm was a takeover target. He tried to save his company by aquring a company called "Odd Lots" which he renamed "Big Lots." He overpaid for Odd Lots thinking that this would assure future support in corporate decisions.
The CEO had conflicts with Odd Lots. He then tried taking out a huge loan from Salomon Brothers. Salomon kicked out the CEO, Salomon tried selling Revco to Rite-Aid. The FTC blocked that deal. Salomon then sold Revco to CVS.
CVS is a massive company. They had 246,000 employees and over 10,000 locations in 2017. It is tempting to think that CVS must somehow be the best run company ever.
The truth of the matter is that central banks are the driving force behind the consolidation. In this acquisition chain one find numerous companies becoming overleveraged and going bankrupt.
Anyway, I have been thinking about creating a large site that allows users to examine acquisition chains in details.
I would love feedback on the presentation of the merger chain. One this presentation, I am using simple nested HTML lists. I might try developing other tools to represent the data. That is, if I find anyone interested in the project.
Click the picture to see the Melville/CVS merger chain:
The picture shows a new CVS store in Sugarhouse, Ut.
Oh cool article! I like this business history stuff, it’s fascinating.
If you are looking for ideas on presentation, I almost want to suggest a genealogy type interface, though I don’t know if that’s feasible given the fact that there are both mergers and splits.
I can create graphical displays of the data with SVG.
The problem is that gathering the data is a pain and the sources I find online are inconsistent. For example, it would be fun to make merger charts that show the market value of companies; so that you could see how the expand and contract during the acquisition process.
Unfortunately this project is like all the other web projects I have on the back burner. I can't find a funding mechanism for the project. Without funding the project can't exist.
Liked, subscribed and stalked.. I mean followed. Yes that's exactly what I meant evil laugh