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CVS Sweetens Caremark Bid

It will now pay $6 in postmerger dividends.

CVS (CVS) - Get CVS Health Corporation Report sweetened its bid for Caremark (CMX) a day after a heavyweight proxy adviser weighed in against the deal.

CVS said it will pay Caremark shareholders $6 a share in special dividends after the deal closes. The news comes a day after Institutional Shareholder Services, a firm that advises big investors how to vote in corporate mergers and other boardroom matters, said Caremark's directors should drop the CVS deal and plan an open auction for the company.

Drug store chain CVS agreed in November to buy mail order pharmacy Caremark in an all-stock deal then valued at around $22 billion. A month later, rival mail order pharmacy

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made an unsolicited cash-and-stock bid for Caremark worth $26 billion. That prompted CVS and Caremark last month to dangle a $2-a-share postmerger dividend before Caremark shareholders in an effort to equalize the compensation being offered by the two deals.

Now, CVS wants to pay $6 a share in the postclose merger. Shareholders will vote next week on whether to accept the CVS deal or whether to continue with Caremark as a stand-alone company.