The shareholders of Caremark Rx, Inc. formally accepted the offer of CVS Corp. on March 16, 2007, over the hostile bid of Express Scripts. The Caremark/CVS merger closed shortly thereafter, ending a takeover battle that began in November 2006 with Express Scripts’ hostile offer for Caremark, which followed on the heels of an initial proposal by CVS.
The board of directors of Caremark had announced on March 8, 2007 that it would recommend that shareholders accept CVS’s proposal over a sweetened hostile bid from Express Scripts. This came on the heals of Express Scripts indications in early March that its proposal would likely trigger a Second Request from the Federal Trade Commission (FTC). That prognosis was confirmed later that week when the FTC issued a Second Request on the Express Scripts deal. The CVS bid had previously received FTC clearance without a Second Request.
This is an example of how competing offerors for a company can use antitrust clearance as a tool to advantage one offer over another. The Caremark shareholders accepted a lower bid from CVS that had already received antitrust clearance over a higher bid from Express Scripts that continued to draw antitrust scrutiny. Companies considering acquisitions of targets that also may be catching the eye of rival bidders should consider the antitrust issues raised by their own bid, as well as that by any rival bids, when planning their acquisition strategies.