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CVS shareholders approve Caremark merger


By Tom Weber, KWMU

St. Louis, MO – Shareholders for the CVS drug store chain this morning (Thu.) approved the company's proposed merger with Caremark.

Caremark is a prescription drug insurance company that's also being pursued by St. Louis-based Express Scripts.

Express's last hope will come tomorrow (Fri.), when Caremark shareholders vote on the CVS deal.

Express has actively appealed to Caremark shareholders to vote against that plan so Express will have a chance to buy the company. For its part, the company issued a statement after this morning's CVS vote to reiterate its position that it would still consider upping its offer if Caremark makes more financial information available.

Some shareholders and analysts have said Express's offer is better than the CVS bid.

CVS announced in November that it would buy Caremark for $21.1 billion in stock. That was followed a month later by Express Scripts' hostile cash and stock $26 billion bid.

Since then, C-V-S has increased its offer three times and Express Scripts has increased its offer once -- a bid currently valued at about $27.2 billion.

Express argues Caremark's board "continues to waste opportunities to obtain the highest value for Caremark stockholders" by shutting the company out of the due diligence process and repeatedly rejecting its bid.

On Wednesday, CVS reminded investors that its latest bid which tacks on a $7.50 special dividend at the deal's close won over longstanding critic, the proxy advisory firm Institutional Shareholders Services Inc., which earlier advised Caremark shareholders to reject the CVS offer.

CVS originally proposed in November to buy Caremark for about $21.2 billion in stock. Express Scripts then made a $26 billion stock-and-cash counter-bid in December. The final offers, made last week, each valued Caremark at around $26.5 billion.

However, a 5% rise in Express Scripts' share this week and a 1% drop in CVS shares have shifted the respective transaction values accordingly.

One advantage CVS has over Express Scripts is regulatory approval for the transaction. Regulators continue to ask questions about Express Scripts' offer given antitrust concerns. Express Scripts is the third-largest pharmacy benefits manager, with Caremark the second-largest behind market leader Medco Health Solutions Inc.


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