The high-stakes battle to acquire Caremark escalated on Thursday when Express Scripts urged shareholders of the rival pharmacy benefits manager to reject an offer from drugstore chain CVS.
Express Scripts said in a letter to Caremark shareholders that the CVS deal would have a "lasting negative impact" and called the CVS offer insufficient.
CVS fired back in a press release, saying the Express Scripts offer carried "significant" antitrust risk that could prevent its approval since such a deal would reduce the number of major pharmacy benefits managers to two from three.
It added that Express Scripts' proposal would hurt the company's financial flexibility, because a combined Express Scripts/Caremark would be "one of the most leveraged public companies in healthcare services."
In its letter to shareholders, St. Louis-based Express Scripts also said it had filed a premerger notification with U.S. antitrust regulators on Wednesday and anticipated clearance "in a timely manner."
Caremark said that it continues to be bound by the terms of its deal with CVS and that its board is reviewing the terms of the offer submitted by Express Scripts.
Express Scripts last month offered to buy Nashville-based Caremark for about $26 billion in cash and stock, seeking to derail the company's planned all-stock sale to CVS, which was announced in November.
In its letter to shareholders, Express said based on year-end closing prices, its offer of $59.75 per share would represent a 16% premium to the CVS deal.
Express Scripts also said it would file a proxy statement in connection with Caremark's special shareholders meeting to consider the CVS deal. "Express Scripts believes that the proposed acquisition of Caremark by CVS will have a lasting negative impact on your investment in Caremark," the company said in its letter.
CVS' bid for Caremark already cleared a regulatory hurdle, since a waiting period required under Hart-Scott-Rodino expired in December without a request for additional information from the U.S. Federal Trade Commission.
In a statement, CVS Chairman, President and Chief Executive Tom Ryan also said that his company was being conservative in estimating cost synergies at $400 million, and that the combination of Caremark's PBM with CVS' drugstore portfolio could lead to significant revenue growth.
When Express Scripts unveiled its offer, it forecast annual cost savings of $500 million.