CVS offers 'best and final' enhancements to Caremark merger proposal, ups cash dividend to $7.50

By Lisa Kerner

Charlotte, N.C., March 8 - CVS Corp. presented its "best and final" enhancements to its merger proposal with Caremark Rx, Inc.

Both companies agreed to increase the special cash dividend payable to Caremark shareholders following closing of the merger to $7.50 per share, from $6.00 per share.

In lieu of the previously announced accelerated share repurchase program, CVS/Caremark will begin a cash tender offer for 150 million, or about 10%, of its outstanding shares at a fixed price of $35 per share, following the merger's close.

Under the merger agreement, Caremark shareholders will receive 1.67 shares of CVS/Caremark stock for each share of Caremark they own.

CVS shareholders will vote to approve the transaction at a special meeting on March 15, and Caremark shareholders will vote on March 16.

"The Express Scripts' offer for Caremark remains fraught with risk, challenges and certain loss of shareholder value," CVS chairman and president Tom Ryan said in the release.

"CVS/Caremark will be an investment-grade company uniquely positioned to offer employers and consumers new products and services that will reduce costs, improve outcomes, accelerate revenue growth and create substantial shareholder value."

CVS reminded Caremark shareholders that its offer, unlike the one from Express Scripts, Inc., has cleared all regulatory hurdles and will close upon shareholder approvals.

At one point, Express Scripts, a St. Louis pharmacy benefit management company, was offering Caremark stockholders $29.25 in cash and 0.426 shares of Express Scripts stock for each share of Caremark stock, for an approximate value of $56.87 per share, or a total of $25 billion.

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

Caremark is a Nashville-based pharmaceutical services company.

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