Egg on Caremark's Face

"CVS has agreed to pay directors' and officers' liability insurance premiums of up to 450% of Caremark's current premiums," CtW pointed out. "Chandler's legal analysis should be cause for alarm not only for Caremark shareholders -- who may lose standing to pursue options backdating claims if this merger is completed -- but also for CVS shareholders who may be left holding the bag if and when damages are awarded in a future Caremark backdating case."

In contrast, Chandler noted, Caremark leaders have been promised neither change-of-control payouts nor extra legal protection if the company joins forces with any other party.

Investors shrugged off the latest twist in the ongoing Caremark saga. All three companies involved -- Caremark, CVS and Express Scripts -- saw their stocks little changed on Monday after rallying in recent months during the three-way soap opera.

Meanwhile, lawyers for disgruntled Caremark shareholders seemed happy that all three parties are still involved.

"The court was very astute in not chasing away any bidder by issuing a broad injunction," stated Stuart Grant of Grant & Eisenhofer. "Instead, he has thrown down the gauntlet before the Caremark board and threatened that, while a broad injunction might not now be appropriate, that does not mean that fiduciary duties were not breached.

"For the Caremark board's sake, we hope they pay heed to the court's warnings."

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