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As widely reported, CTW Investment Group has joined other major Longs Drug Stores (LDG) investors in openly questioning the valuation of the CVS Caremark (NYSE:CVS) transaction -- particularly with respect to LDG's real estate holdings. This is precisely the type of shareholder concern discussed in the previous entry which could easily serve to force CVS to increase its current offer and/or disrupt the transaction in general.

Despite, LDG's subsequent (and rather tentative) claims that shareholders will ultimately accept the current offer, the legal and public shareholder problems are clearly escalating to the point where the company management must consider renegotiating with CVS. Failing this, LDG shareholder opposition is likely to continue to mount over the next several days and will almost certainly result in an extension of the tender offer into October.

This publication currently anticipates that CVS will indeed improve its offer to at least $73 to ensure the successful completion of this transaction.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

Source: Merger Watch: Longs Drug Stores - CVS Caremark