Drug-store chain CVS Corp won the battle to buy Caremark Rx Inc on March 16, as the pharmacy benefit manager's shareholders approved the $24 billion deal, thwarting a higher bid from Caremark rival Express Scripts Inc.
Caremark said a "substantial majority" of outstanding shares were cast in favour of the merger. CVS said it expects the deal to close by the middle of next week after the vote is certified.
The deal will allow CVS, which already has more US stores than any other drugstore chain, to expand its prescription benefits business and mail-order operations at a time when traditional pharmacies are under pressure from such mail-delivery facilities.
"We have said from the beginning that this combination will transform the way pharmacy services are delivered," CVS Chief Executive Officer Tom Ryan said in a statement.
CVS did not raise its original stock offer, which calls for Caremark shareholders to receive 1.67 CVS shares for each Caremark share. But CVS did sweeten its bid with a special dividend of $7.50 per share, which will be paid to Caremark shareholders once the deal closes.
By comparison, Express Scripts' deal was valued at about $28 billion.
"We have constantly put ourselves in a position to benefit shareholders," Caremark CEO Mac Crawford told reporters after the meeting in Nasvhille .
OPTIMISM FOR CVS, EXPRESS:
Analysts said the conclusion of the take-over battle could bode well for both CVS and Express Scripts.
Goldman Sachs analyst John Heinbockel said CVS' shares could rise another 5 percent in the near term as the stock benefits from technical issues related to short-selling, an upcoming tender offer, and the lack of negative comments from Express.
"As 'new' CVS's enhanced growth prospects and stronger returns become recognised by the market, we expect the shares to trade solidly higher," Heinbockel said in a research note.
The Caremark battle has thrust pharmacy benefit managers into Wall Street's spotlight. The companies administer prescription drug benefits for employers and health plans. For its part, Express Scripts said in February it would increase its share buyback should it lose out on Caremark.
Jeffries & Co analyst Arthur Henderson said in a research note he remained "enthusiastic" about Express Scripts' growth prospects and forecast further consolidation.
"Either way, Express Scripts is sitting pretty as a consolidator or as an acquisition target," Henderson said.