RiskMetrics Group, the parent of the proxy advisory service ISS, on September 12 recommended that shareholders of Longs Drug Stores not tender their shares in the tender offer launched by CVS. According to reports published by MarketWatch and The Investor's Business Daily, RiskMetrics was concerned primarily that "It does not appear that Longs made any attempt to play suitor against suitor. Longs appeared to place a priority on speed and certainty of closing." Additionally, the reports indicate that RiskMetrics was concerned that Longs' real estate portfolio was undervalued in the CVS offer.

It is noteworthy that ISS has made a recommendation relating to a tender offer.ISS historically tended not to oppose M&A transactions, although in recent years it has become more vocal, especially in 2007 when it opposed Mitel Networks' offer for Inter-Tel in June, Eisner/Madison Dearborn's offer for Topps in August and URS' offer for Washington Group in August. However, these recommendations, and indeed most of ISS' advisory work, has related to shareholder voting scenarios, not tender offers. It is possible that RiskMetrics may have felt the CVS offer presented a uniquely compelling case to RiskMetrics. Nonetheless, market participants should be on the lookout for continuing active participation by RiskMetrics, which may attempt to leverage ISS' importance in proxy contests into new arenas.