CVS, Caremark forced to postpone meetings to decide merger as Express Scripts weighs in

By Lisa Kerner

Charlotte, N.C., Feb. 13 - Caremark Rx, Inc. and CVS Corp. are postponing their board meetings until at least March 9 following a ruling by the Delaware Chancery Court ordering the postponement.

The shareholder meetings to discuss the proposed Caremark and CVS merger were originally scheduled for Feb. 20, according to a company news release.

"We look forward to completing our merger with Caremark in early March," CVS president and chief executive officer Tom Ryan said in the release.

"Our merger is based on a compelling strategic rationale that has resonated with consumers, employers and shareholders and will create substantial shareholder value. Having cleared all regulatory hurdles including FTC approval, we are poised to obtain shareholder approval and to move forward as the nation's leading pharmacy services provider."

The special cash dividend payable to Caremark shareholders following the merger was increased to $6.00 per share from $2.00 per share.

"This action to triple the special cash dividend makes an already compelling transaction even more compelling for our shareholders," Caremark president and chief executive officer Mac Crawford said in a news release.

"We urge Caremark shareholders to support the strategic combination with CVS, which now offers even greater immediate value in addition to substantial long-term benefits."

The original terms of the merger agreement remain unchanged, with Caremark shareholders receiving 1.67 shares of CVS/Caremark stock for each share of Caremark they own.

The companies estimate annual cost synergies in excess of $500 million and incremental revenues of between $800 million and $1 billion in 2008 as a result of the merger.

"Clearly, the CVS/Caremark merger is superior to the illusory and highly conditional Express Scripts' 'offer' in every conceivable way. Our merger can be closed quickly, delivers real and concrete shareholder value and is based on a compelling strategic rationale," Ryan added.

Express Scripts Inc. issued a response to CVS and Caremark, stating that "[Tuesday's] announcement can't paper over a flawed process, weaker currency, and unproven strategic rationale. Caremark stockholders are still being offered a low growth CVS currency and ownership in a CVS/Caremark combination that is predicated on a model that history shows will destroy value."

In contrast, Express Scripts said its Caremark offer offers "greater certainty of value through a significant cash payment, approximately 50% of the total consideration, in a combination based on a model that has historically added value."

Express Scripts urged Caremark stockholders to vote against the CVS transaction.

CVS is a retail pharmacy chain based in Woonsocket, R.I.

Caremark is a Nashville-based pharmaceutical services company.

Express Scripts is a pharmacy benefit management company located in St. Louis.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.