DBRS Downgrades CVS Corp to BBB(high) and R-2(high), Tr. Stb

Dominion Bond Rating Service (“DBRS”) has today downgraded the Commercial Paper and Senior Unsecured Debt ratings of CVS Corporation (“CVS” or the “Company”) to R-2 (high) and BBB (high), respectively, from R-1 (low) and A (low). These rating actions follow CVS’s announcement that it is planning to purchase approximately 700 stand-alone drug stores from Albertson’s Inc. for US$3.9 billion in cash (including US$1.0 billion for related real estate interests). The rating trends are Stable. These rating actions resolve the “Under Review with Negative Implications” status applied on January 23, 2006.

DBRS notes that CVS’s financial profile will initially weaken due to incremental debt that will result from the proposed transaction, which is expected to close in mid-2006. However, DBRS expects key credit metrics to return to pre-acquisition levels within two years of closing as a result of strong expected operating cash flows and a focus on debt reduction.

DBRS also recognizes that the proposed transaction will provide CVS with a strong market presence in southern California and will also boost its presence in existing CVS markets in the U.S. Southwest and Midwest. The acquisition is expected to be accretive to earnings beginning in the full year of ownership. Integration risk is not considered excessive given the size of the acquisition relative to CVS’s existing operations, the Company’s experience with past acquisitions, and the favourable operating performance of the acquired stores.