Express Scripts has proposed a competing $26 billion cash and stock bid to acquire Caremark Rx backed by financing from Citigroup and Credit Suisse. The offer outweighs Caremark's existing $21 billion all-stock takeover offer from CVS, announced in November. Further terms of the financing could not be determined.
Express Scripts' proposal includes acquiring all outstanding Caremark shares for $29.25 in cash as well as 0.426 of a share of Express Scripts stock for each share of Caremark stock, valuing each Caremark share at $58.50. CVS' all-stock bid would give Caremark shareholders 1.67 of a share of CVS for each share of Caremark, according to a filing with the Securities and Exchange Commission.
Caremark issued a statement the same day as the offer noting it is bound by the terms of the initial agreement with CVS and that the company's board of directors would review the terms of the submitted proposal. Standard & Poor's placed Express Scripts ratings, including its BBB corporate credit rating, on CreditWatch with negative implications following the announcement. S&P also commented that CVS remains on CreditWatch with positive implications, where it was placed Nov. 2, when the initial acquisition was announced.
CVS, along with SUPERVALU and Cerberus Capital Management, acquired food-drug store operator Albertson's for $17.4 billion in May. The large deal was backed by a $6 billion credit facility led by Royal Bank of Scotland (CIN, 5/5).
Based in St. Louis, Express Scripts is a pharmacy benefit management company providing PBM services to over 50 million members. PBMs are companies under contract by managed care organizations, self-insured companies and government programs to manage pharmacy network management, drug utilization review and disease management. Nashville-based Caremark is a pharmaceutical services company that provides comprehensive drug benefit services to health plan sponsors and their plan participants in the U.S. Calls to Edward Stiften, cfo at Express Scripts, were referred to a spokesman who did not return calls. Calls to spokesmen at Caremark and CVS were not returned.