Express Scripts Tender Offer

Express Scripts (ESRX) began a tender offer for Caremark (CMX), taking the already hostile dealings between the mail-order pharmacies to a new level.

St. Louis-based Express Scripts said it is making the offer because the board of Nashville, Tenn.-based Caremark has refused to meet with it or even consider its cash-and-stock bid. Caremark has said it prefers a merger it announced in November with retail drug chain CVS (CVS).

Express Scripts' proposal, first made last month, includes $29.25 a share in cash and 0.426 shares for each Caremark share. Express Scripts said its $25 billion deal gives holders a 7% premium to CVS' all-stock offer, which would swap 1.67 CVS shares for each Caremark share.

Last week, Caremark formally rejected the Express Scripts proposal. Express Scripts replied by threatening to launch a proxy fight to replace four directors on the Caremark board, though Caremark noted that its merger with CVS is scheduled to close this quarter -- before the company's annual meeting would be held.

The spread between the offers, once as wide as 13%, has been narrowing over the last week as Wall Street has taken to betting that CVS will prevail. Caremark has said it believes a CVS merger presents strategic opportunities absent from an Express Scripts tie-up and that the Express Scripts deal could be derailed by antitrust issues. Express Scripts says its offer is superior and that shareholders should have a chance to vote.

On Tuesday, Caremark fetched $56.83 -- in line with the $56.87 Express Scripts deal.

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