Prescription benefit manager Caremark and its preferred suitor CVS today announced that when their merger deal closes the company will pay a special $2 per share dividend to common stockholders and will retire 150 million shares of common stock in order to optimize its capital structure. Express Scripts questioned the dividend’s value to shareholders and it announced an exchange offer for Caremark stock on the following terms which align with Express Script’s original offer
Under the terms of the Exchange Offer, Express Scripts is offering Caremark stockholders $29.25 in cash and 0.426 shares of Express Scripts stock for each share of Caremark stock. Based on closing stock prices on Friday, January 12, 2007, the Express Scripts offer has a value of $56.87 per share, or approximately $25 billion in the aggregate, and provides Caremark stockholders with a 7% premium to the current value of the CVS proposal.
Express Script is mailing the offer to all of Caremark’s shareholders. The offer expires “at 12:00 midnight, New York City time, on Tuesday, February 13, 2007, subject to extension.” Bloomberg notes that “Shares of CVS fell 15 cents to $31.79 at 4:17 p.m. in New York Stock Exchange composite trading. Caremark dropped 58 cents to $56.25 and Express Scripts shares climbed 88 cents to $65.71 in Nasdaq Stock Market composite trading.”