CVS triples post-merger Caremark dividend offer

CVS Corp. (NYSE: CVS) and Caremark Rx Inc. (NYSE: CMX) today said they have tripled their previously announced post-merger dividend for Caremark shareholders, to $6 per share. The move follows the release of opinions by Institutional Shareholder Services and Glass Lewis & Co. that said CVS’ offer was too low.

Other terms of their November “merger of equals” agreement remain unchanged: Caremark shareholders would receive 1.67 shares in the new CVS/Caremark; CVS shareholders would own 54.5 percent of the combined company, and Caremark shareholders, 45.5 percent.

The change increases the value of the CVS bid by 7 percent, to $25.7 billion, Bloomberg News said. Express Scripts Inc.’s highly leveraged rival bid is valued at $26.1 billion.

“I think it’s enough only to the extent that Express Scripts doesn’t counter,” Matt Kaufler, who helps manage $2.6 billion, including CVS shares, at Clover Capital Management in Rochester, N.Y., told Bloomberg. “It makes it harder, but not impossible for the Caremark shareholder to say no.”

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The proposed merger is to go before shareholders of both companies next week. Caremark’s special shareholders’ meeting is set for Tuesday, Feb. 20, in Nashville, and CVS’ for Friday, Feb. 23, at the corporate headquarters in Woonsocket. The deal would close shortly thereafter, the companies said.

The revised special dividend – declared yesterday by Caremark’s board of directors, who also unanimously reaffirmed their recommendation that shareholders approve the merger – would be payable immediately after the merger to Caremark shareholders of record on the day before the transaction closes.

The full news release is available at BusinessWire.com. Additional information about Caremark is available at www.caremark.com and www.cvscaremarkmerger.com.

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