Caremark Rejects Bid From Express Scripts
Drug-Benefits Firm Seeks CVS Deal
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Tuesday, January 9, 2007
NASHVILLE, Jan. 8 -- Caremark Rx rejected a buyout offer by a rival pharmacy-benefits manager Monday and pledged to continue to pursue a bid from drugstore operator CVS.
Express Scripts responded by launching an effort to salvage its $26 billion stock-and-cash offer by reshaping the Caremark board of directors. The CVS deal, valued at $21 billion in stock, has passed antitrust scrutiny by the Federal Trade Commission and is expected to go to a shareholder vote and be completed by the end of March.
Express Scripts of Maryland Heights, Mo., contends that its proposal represents a 13 percent premium for shareholders over what Woonsocket, R.I.-based CVS is offering, but Caremark hasn't been swayed.
"The board has unanimously concluded that pursuing discussions with Express Scripts is not in the best financial or strategic interests of Caremark and its shareholders," Nashville-based Caremark said in a statement Monday.
Express Scripts said a few hours later that it had notified Caremark of its intentions to nominate four candidates to the Caremark board at the company's next shareholder meeting.
The only obstacle in the way of a shareholder vote on a deal between Caremark and CVS is a pending lawsuit filed in state court in Delaware, where Caremark is incorporated, by a Louisiana pension company with a block of Caremark stock. An injunction hearing is set for March 20 or earlier if a shareholder meeting to vote on the CVS deal is set, documents show.
The lawsuit seeks to block the CVS deal, claiming it is designed to benefit Caremark insiders at the expense of the shareholders. A similar lawsuit filed in federal court in Nashville was dismissed in favor of the Delaware suit.
