CVS Angles for Longs' Real Estate Bounty

OKLAHOMA CITY -- CVS (CVS) knows how to strike - and win -- a deal.

Granted, in its current quest for Longs Drug Stores (LDG), CVS now faces some pesky competition from rival Walgreen (WAG), which offered $75 a share for Longs just three days before CVS's own $71.50-a-share tender offer was set to expire.

Unable to win enough support for its lower bid - and unwilling, for now, to raise it any higher - CVS has given Longs shareholders another month to make up their minds.

Ultimately, CVS tends to get its way. Last time around, the company overcame a higher bid from rival Express Scripts (ESRX) to win control of Caremark despite investor outrage.

Less than 18 months after that deal closed, CVS adopted a similar approach with Longs. In both cases, CVS promised rich payouts to its target's top executives and secured attractive buyout prices -- sheltered by strict deal-protection measures -- in return.

Of course, Caremark shareholders fought back and forced CVS to repeatedly raise its bid. From the start, Longs shareholders have aimed to do the same.

"The (Longs) board -- well aware of the material insider benefits the Caremark board secured via its sale to CVS -- was eager to cater a sale of the company to CVS in order to receive similar benefits and to secure lucrative change-in-control payments that board members and management would not have received absent the proposed buyout," shareholders claimed in one of two class-action lawsuits they recently settled with the company. "Accordingly, the board catered the sales process exclusively to CVS and made no attempts to adequately canvas the market to ensure that they were securing the best possible price for the company's shares."