CAREMARK REJECTS EXPRESS SCRIPTS BID, CONFIRMS CVS MERGER

CVS's attempt to take over Caremark got a boost as the pharmaceutical services company announced it is rejecting a $26 billion bid from Express Scripts, saying it was not in the shareholders' best interests.

Caremark said it is supporting the CVS bid and that it believes Express Scripts' proposal is merely a defensive move to interfere with the CVS merger. The company claimed that Express Scripts has lost approximately $1 billion in net business to Caremark over the past three years and does not want to compete with Caremark and CVS combined.

Caremark accepted a $21 billion stock-for-stock merger from CVS Nov. 1, 2006. In December Express Scripts proposed a competing bid of $26 billion.

According to Caremark, the Express Scripts bid lacks "strategic rationale" and would result in a weakened company with reduced financial resources and flexibility.

Caremark also said it does not believe Express Scripts would be able to successfully complete the merger. Express Scripts' financial results indicate the company may not be effective in integrating acquisitions, and the company has never integrated such a large business, Caremark said.

Caremark and CVS have already received antitrust clearance. The companies expect to close the transaction by the end of the first quarter, Caremark said.