Battle to Buy Long’s Drugs

Not a big surprise for CVS Caremark to make a play for Long’s.  They have been a much more acquisition oriented company.  But, Friday, Walgreens came out with a slightly larger bid which is much more unusual.  Walgreens until a few years ago had grown almost entirely through organic growth.  (WSJ Blog on this)

With Long’s, either company will get 500 stores in the West – CA, AZ, HI, and NV.  They will also get RxAmerica which is a PBM with 8 million lives.  This would be a big jump for Walgreen’s PBM, and a nice bump for the CVS Caremark PBM.

The CVS Caremark deal was essentially done at $2.7B before Friday’s public bid of $2.8B by Walgreens.

Tom Ryan, Chairman, President and CEO of CVS Caremark, commented, “Our offer represents a full and fair price for Longs shares, and we stand firm on our price. Furthermore, the CVS Caremark’s offer has cleared all regulatory hurdles and provides certainty of completion to Longs shareholders.”

So far, it doesn’t seem like CVS Caremark is going to up their bid.  Tom Ryan should be used to this.  When they bought Caremark, Express Scripts made a late bid in the process.  I am not sure what will happen here, but I would expect that seeing Walgreens as the bigger will certainly make them think hard about how to get this deal done.

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