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Judge rejects bid to block CVS-Caremark deal


WILMINGTON, Del.--The Delaware Court of Chancery has denied a motion by Express Scripts Inc. that attempts to block CVS Corp.'s proposed takeover of pharmacy benefit manager Caremark Inc., paving the way for Caremark shareholders to vote on the deal.

Rejecting a preliminary injunction sought by PBM Express Scripts of St. Louis and two Caremark institutional investors, Chancellor William B. Chandler on Friday ordered that the vote will be held 20 days after Caremark makes supplemental disclosures regarding appraisal rights and the structure of fees to its financial advisors, which the Nashville, Tenn.-based PBM has acknowledged it will do as soon as possible.

"We're pleased with the court's decision, which will soon provide our shareholders the opportunity to vote on our compelling combination with CVS. The transaction with CVS offers our shareholders significant near-term value, as well as long-term strategic and financial benefits. We look forward to obtaining shareholder approval and promptly closing the merger, which has already received regulatory approval," a Caremark statement said.

Woonsocket, R.I.-based CVS, the nation's largest retail pharmacy chain, announced Nov. 1 that it sought to acquire Caremark for about $21.2 billion in stock.

Last week, Chancellor Chandler postponed until at least March 9 a scheduled Feb. 20 meeting where Caremark shareholders were to vote on the merger. The ruling followed CVS' offer to increase the special cash dividend payable to Caremark shareholders after closing of the merger to $6 per share from the previously announced $2 per share. CVS also postponed its own shareholder vote, which had been scheduled for Friday, in light of the judge's delay of the Caremark shareholder vote.

The increased dividend offered by CVS added about $1.7 billion in value to the proposed deal, bringing it closer to the value of a competing offer Express Scripts made in December. Express Scripts offered $26 billion in a combination of stock and cash.

"We agree with the court's observations concerning inadequacies in the board's process in the sale of Caremark," Express Scripts said in a statement. "Given today's ruling, we are hopeful that the best interests of Caremark stockholders can finally be served."

Express Scripts, however, said it will continue to pursue its competing bid for Caremark.

"We remain ready to sit down and start discussions with the Caremark board. The Express Scripts offer provides superior value and we look forward to commencing confirmatory due diligence as soon as possible."