U.S. News

Caremark Shareholders Approve CVS Acquisition


Caremark Rx shareholders on Friday approved a roughly $24 billion takeover offer from drug-store chain CVS bringing to an end a months-long takeover fight with Express Scripts for the rival pharmacy benefits manager.

Caremark said a "substantial majority" of outstanding shares were cast in favor of the merger. CVS said it expects the deal to close by the middle of next week after the vote is certified.

The deal will allow CVS which already has more stores than any other drugstore chain, to expand its prescription benefits business and mail-order operations at a time when traditional pharmacies are under pressure from such mail-delivery facilities.

"We have said from the beginning that this combination will transform the way pharmacy services are delivered," CVS CEO Tom Ryan said in a statement.

CVS had not raised its original stock offer, which calls for Caremark shareholders to receive 1.67 CVS shares for each Caremark share. But CVS did sweeten its bid with a special dividend of $7.50 per share, which will be paid to Caremark shareholders once the deal closes.

Caremark agreed to be acquired by CVS in an all-stock deal in November. However, the CVS offer initially valued Caremark with no premium.

Express Scripts joined the fray in December with an unsolicited cash and stock offer for Caremark now worth about $28 billion.

Express Scripts also sweetened its bid earlier this month by offering to pay interest on the cash portion of its offer.

Express Scripts said on Thursday it was "firmly committed" to raising the cash part of its offer for Caremark if it could find more synergies. But it added that Caremark had shut it out from conducting confirmatory due diligence.

The special CVS cash dividend will be payable at, or promptly after, closing of the merger to Caremark shareholders of record as of the close of business on the day immediately preceding the closing date, CVS said.

CVS also plans to do a tender offer to retire 150 million of CVS/Caremark's outstanding shares -- or about 10% of the combined company -- as part of an announcement in January that it made to further sweeten its bid.

CVS shareholders had approved the takeover plan on Thursday.

Shares of Caremark rose 27.5% from Oct. 31 -- the day before CVS and Caremark confirmed that they were discussing a possible merger -- to Thursday's close.

Caremark shares were off 71 cents at $62.04 in morning trade on the New York Stock Exchange. CVS shares were down 60 cents, or 1.8%, at $32.74.

Express Scripts shares were up 29 cents at $82.70 on the Nasdaq.