Express Scripts Ups Its Caremark Bid

Late Wednesday, Express Scripts Inc. increased its hostile and competitive cash/stock bid for rival pharmacy benefits manager Caremark Rx Inc. In December, a month after Caremark agreed to a "merger-of-equals" with CVS in which Caremark shareholders would receive 1.67 CVS shares (presently $31.32) plus a $6 dividend for each share they own (valuing the company at about $21b), Express Scripts upped the ante by offering $29.25 in cash and 0.426 share (presently $74.77) of its stock (giving it a $26b value). Its new offer includes an additional cash consideration of 6% per annum (0.48 cents/share/day) which will start April 1 and accrue through the closing date of Express Scripts' acquisition or 45 days after FTC approval of the deal, whichever comes first, to be paid to Caremark shareholder upon the deal's close, which it believes will come no later than Q3. Following two postponements, Caremark shareholders are slated to vote on the CVS merger on March 16. Yesterday's increased offer came after Express Scripts' request to further delay the shareholder vote was denied. Also yesterday, Express Scripts said it expects the FTC to make a second request for information on its offer, a move celebrated by CVS's board, which has consistently questioned the rationale and the antitrust elements of Express Scripts' bid. It also raised its full-year earnings forecast $0.06 to $4.14-4.26. Express Scripts shares were up yesterday $0.21 to $74.77, Caremark fell $0.33 to $61.30, and CVS was up $0.02 to $31.32.

Sources: Press Releases: Express Scripts Improves Offer to Acquire Caremark, CVS Says Express Scripts' Second Request Confirms the Serious Antitrust Concerns Overhanging Its Highly Conditional Offer, CVS Pleased with Chancery Court Ruling Allowing Vote on Caremark Merger to Proceed, MarketWatch, TheStreet.com, Bloomberg
Commentary: Is CVS the Prescription Fix for Caremark? • CVS-Caremark Deal Would Create Pharmacy Powerhouse • Don't Expect Express Scripts to Bow Out of Caremark Rx Bidding
Stocks/ETFs to watch: Express Scripts Inc. (ESRX), CVS Corp. (CVS), Caremark Rx Inc. (CMX)

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