Express Scripts Undercuts CVS in Brazen Bid For Rival Caremark Rx

In a brazen attempt to undercut an already approved takeover bid by pharmacy chain CVS for pharmacy benefit services company Caremark Rx, rival Express Scripts has made a hostile $26 billion bid for the company - offering a premium of 20% more per-share than CVS' bid. Acceptance of the bid would mean a rescinding of CVS' offer, which Caremark's board has already accepted. CVS' bid came in at 1% less than Caremark's then stock price of $49 and failed to offer shareholders the goodwill premium usually associated with buyout offers, opening the door for the much smaller Express Scripts' much better counter-offer. Now Caremark (chart pictured) shareholders stand to receive $58.50, through a combined cash and stock offer (the CVS offer was for stock only). A clause at the time of the CVS-Caremark deal allowed Caremark to negotiate with anyone offering it a better deal mean its done-deal with CVS is reversible. If approved, an Express-Caremark merger would create the largest drug benefit services company by market cap in the world. Caremark shares rose 9.4% to 42 Euros ($55.02) in Germany today, after closing at $50.30 on the NYSE Friday.
• Sources: Press Release, New York Times, Forbes, Reuters, Bloomberg
• Related commentary: How the CVS-Caremark Merger Might Work (Or Not), CVS + Caremark = Un-Analyzable Company, CVS-Caremark Deal Would Create Pharmacy Powerhouse, Is CVS the Prescription Fix for Caremark?
• Potentially impacted stocks and ETFs: Express Scripts (ESRX), Caremark RX (CMX), CVS (CVS). Competitors: Medco Health Solutions (MHS), Wellpoint, Inc. (WLP). ETFs: iShares Dow Jones US Health Care (IHF)

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