Longs Drug Stores To Give Shareholders More Info Regarding CVS Deal
Longs Drug Stores said it will provide additional information to pension funds that have filed a lawsuit claiming the $2.9 billion purchase offer from CVS Caremark undervalues certain assets held by the firm, according to a lawyer involved in the case, the Silicon Valley/San Jose Business Journal reports.
The pension funds, some of Longs' biggest shareholders, raised concerns that CVS's offer of $71.50 per share -- a 32% premium over the company's stock price on the day the deal was announced -- fails to take into account the full value of real estate holdings on the West Coast and Hawaii (Silicon Valley/San Jose Business Journal, 9/3).
A letter from CtW Investment Group, dated Tuesday and released to the public on Wednesday, stated, "We believe there are reasonable grounds to suspect that the current tender offer from CVS, which the Longs board has endorsed, undervalues the company's real estate assets." The group estimates that the properties were undervalued by 18% to 26% (Colliver, San Francisco Chronicle, 9/4).
Longs will provide the plaintiffs with the real estate documents it gave to CVS during the due diligence process, make people available for depositions and release minutes from board meetings, according to Blair Nicholas, a lawyer representing the Louisiana Municipal Police Employees Retirement System.
For the deal to be finalized, 66% of Longs shareholders must approve the sale. The tender offer expires Sept. 15, at which time CVS can extend the timetable, make a new offer or walk away from the deal.
A Sept. 12 hearing was set to hear a motion for a preliminary injunction, which, if granted, could delay the acquisition. However, courts typically do not grant such injunctions (Silicon Valley/San Jose Business Journal, 9/3).