Shopping For Growth Factor

Two decades ago, Thomas Ryan was filling prescriptions at a CVS drugstore. By late last year, he had risen to vice-chairman of CVS and CEO of its pharmacy business, overseeing 1,408 drugstores. Ryan, 44, wants more. On Jan. 27, CVS and rival Revco, with 2,600 stores, confirmed they are discussing a merger.

Ryan's plan faces fewer hurdles than the RiteAid-Revco combination proposed last year. Then, the FTC barred the deal on antitrust grounds. Such concerns are less of a problem for CVS and Revco because the two have built their businesses in separate regions of the country. CVS, with $5.5 billion in 1996 sales, operates mostly in the Northeast. Revco, which is expected to post 1996 revenues of $5.9 billion, reaches from Ohio to Florida.

Revco won't come cheap to CVS. Its stock price has risen 71% in the past six months, to about $37, on a rash of industry buyouts. And Merrill Lynch analyst Gary Vineberg, notes that Revco's annual sales-per-square foot are about $335, just 60% of CVS's. Most likely, Ryan has a prescription for what ails Revco.

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