Longs Sticking to CVS Merger Plan

On Friday, Walgreen crashed the party with a higher $75 offer of its own. Walgreen also agreed to cover a costly breakup fee, equal to another $3 a share, if Longs would accept its proposal instead.

Longs doesn't even look tempted, however. In fact, the company won't even talk to Walgreen right now.

"After carefully considering your expression of interest with our outside financial and legal advisors, our board of directors has determined not to furnish information to - nor have discussions and negotiations with - Walgreen," Longs stated in a letter to Walgreen on Wednesday. "The board has determined to continue to recommend to its stockholders that they accept the tender offer by CVS Caremark" instead.

Shares of Longs tumbled 3.5% to $73.64 on the news. Before that, the stock had actually climbed above Walgreen's offering price.

Meanwhile, Longs tried to justify its move.

For starters, Longs claimed that Walgreen shied away from accepting regulatory risks during past negotiations and could very well do so again. Moreover, the company said, Walgreen has presented no "clear roadmap" to complete the deal and could take a full year to close the transaction. Meanwhile, it added, Walgreen has offered no extra compensation for those delays.

In addition, Longs said, Walgreen has demanded due diligence on Longs before presenting a formal merger agreement and has arranged no financing for the deal in the meantime. Finally, it concluded, Walgreen cannot promise -- with the same certainty that CVS has -- that it can execute a deal in the end.