Drugstore operator CVS Corp. said Tuesday it increased the value of its proposed acquisition of Caremark Rx Inc. by boosting the special cash dividend it will pay to shareholders to $6 per share from $2.
The move comes after several shareholders and proxy advisers called the CVS offer too low. A vote by Caremark shareholders on the offer is set for next week.
CVS, of Woonsocket, R.I., is competing with a hostile offer from pharmacy benefits manager Express Scripts Inc. to buy Caremark, though the Caremark board favors the CVS bid.
Other conditions of CVS’s stock bid for Nashville-based Caremark remain unchanged, and the companies reiterated the benefits of the proposed deal, including annual cost savings and cash flow projections.
The CVS stock bid was worth more than $24 billion before the increased dividend was announced, which adds about $1.7 billion to the total. That brings it roughly in line with the Express Scripts bid worth about $26 billion.
The CVS offer has already won antitrust approval. But the offer from Express Scripts of Maryland Heights, Mo., has yet to receive antitrust clearance.
“Clearly, the CVS/Caremark merger is superior to the illusory and highly conditional Express Scripts’ ’offer’ in every conceivable way,” said Tom Ryan, chairman, president and CEO of CVS. “Our merger can be closed quickly, delivers real and concrete shareholder value and is based on a compelling strategic rationale.”
Several investment advisory firms, including Glass, Lewis & Co. and Institutional Shareholder Services, have said that Caremark’s board has not succeeded in getting the best deal for its shareholders and have urged, in advance of the latest planned dividend increase, that Caremark shareholders to reject the CVS bid.
Caremark shareholders will vote on the deal Feb. 20, and CVS shareholders will vote Feb. 23.
