The Five Dumbest Things on Wall Street This Week

2. Synergy Silliness

CVS (CVS Quote) and Caremark (CMX Quote) are showing some incredible foresight.

This week the big drugstore chain and the mail-order pharmacy sweetened their $22 billion merger plan. Scrambling to outflank Express Scripts' (ESRX Quote) unsolicited $25 billion offer, CVS dangled a special $2-a-share post-merger dividend.

"As CVS and Caremark have worked our way through the merger process," said CVS chief Tom Ryan, "we have grown increasingly enthusiastic about the strategic benefits of our merger, and about the additional financial flexibility our partnership will create."

Enthusiasm and financial flexibility have indeed been hallmarks of this deal. When CVS and Caremark announced their all-stock tie-up back on Nov. 1, they spoke of creating "a powerful force for change in pharmacy services." They promised "substantial operating synergies of approximately $400 million."

But the synergy race was only getting started. On Jan. 4, two weeks after Express Scripts joined the bidding, CVS spoke of cost synergies that "we have conservatively estimated at $400 million." Three days later, CVS said its proposal was "now expected to create in excess of $500 million in realizable cost synergies" -- matching the rival Express Scripts estimates.

This week, the companies revealed that beyond their huge and "conservatively" estimated cost savings, they now see "between $800 million and $1 billion in incremental revenues in 2008" -- and "significantly more thereafter."

These guys may need to have their prescriptions checked.

Dumb-o-Meter score: 91. "A new week, a new synergy number," Express Scripts chortles.