Longs Drugs investor Pershing Square opposes deal with CVS, identifies other possible buyers

By Lisa Kerner

Charlotte, N.C., Sept. 11 - Pershing Square Capital Management, LP reached out to fellow Longs Drug Stores Corp. shareholders, explaining its opposition to CVS Caremark Corp.'s acquisition of the company.

In a letter to Longs shareholders, Pershing Square said it has identified four other potential buyers for Longs, including two separate strategic buyers, a real estate investment trust and a real estate private equity investor.

According to a schedule 13D/A filed with the Securities and Exchange Commission, Pershing Square owns approximately 3.1 million of Longs' outstanding shares and has economic exposure to approximately 9.2 million notional shares, or approximately 25.6% of the company's outstanding common stock.

Pershing Square said it does not plan to tender its shares into the CVS Caremark offer and questioned the process that led to the proposed transaction.

CVS Caremark, a Woonsocket, R.I., drugstore chain, is contractually obligated to hold its offer open for one year, during which Longs is permitted to pay its normal $0.14 dividend.

Pershing Square said it does not believe the CVS Caremark's minimum tender condition of 66 2/3% of the outstanding shares will be satisfied by Sept. 15, 2009.

Longs, a Walnut Creek, Calif., drugstore chain, agreed to be acquired by CVS in August, for $71.50 per share, or $2.9 billion including debt.

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