CVS Caremark will acquire the Medicare Part D prescription drug unit of Universal American, The Wall Street Journal reports. The U.S. pharmacy service provider will pay a total of $1.25 billion for the acquisition. As part of the deal, CVS will acquire all the outstanding stock of Universal American and allocate 100% of a newly formed public company to the company’s shareholders. Universal American holders will receive one share of the new company in exchange for each share of Universal American they currently own.

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