Ackman Has Buyers for Longs: CVS Answers His Valuation

Bill Ackman, who has an economic interest in 26% of Longs Drugs (LDG) shares says the CVS (CVS) offer is insufficient and is getting his own buyers. The CEO of CVS answers his claim this morning on CBNC.

From the Letter:

We and our financial advisor are pursuing alternative transaction partners for the Company. We have identified four potential buyers including two separate strategic buyers, a REIT and a real estate private equity investor, each of which we believe is interested in pursuing an alternative transaction with the Company. Some of these parties have been identified in the press while others have not. We are confident that the Company and its advisors would view each of these parties as bona fide and will recognize each as having the willingness and ability to pay substantially more than $71.50, including any lawful break-up fee, in addition to a substantial premium to shareholders.
While we can give no assurance that any party will come forward with an offer, the likelihood of such an event would materially increase if interested parties have more time to do their work and if the Company appropriately responds to inquiries that could lead to one or more superior offers.
Fortunately, given the tender offer’s 66 2/3% minimum tender condition, the Board has empowered shareholders to act on their own behalf by choosing not to tender into the offer at this time. Moreover, given the put right described above, shareholders retain the optionality to sell at a later date and get paid dividends while they wait.
While the terms of the Transaction limit the Company’s ability to fully re-open the auction process, Pershing Square and Blackstone are not limited from seeking higher and better offers. We are continuing to do just that. Blackstone will carry on its efforts to encourage potentially interested parties to approach the Company with alternative transactions. We are hopeful that, if such parties move forward with alternative transaction proposals, the Company’s Board of Directors and its advisors will welcome the opportunity for a better deal.
We will update you with our progress within 45 days. Please feel free to call me if you have any questions.

On CNBC today the CEO of CVS answered Ackman’s comments from yesterday. Here is what Ackman said:

Now, the CVS CEO’s answer:

It is unfortunate that neither CVS or CNBC seemed to be aware of the Ackman letter from yesterday. Perhaps the discussion would have been more accurate had they been aware of the other potential buyers?

No matter who you believe here is the really sad part of this whole thing. Ackman, whether you admire or despise him is doing the very job the Board of Directors and the CEO of Long’s should have done, maximize the potential value for shareholders.

The more I see stuff like this the more I start to lean toward the camps of people who want more shareholder rights and control…and I don’t even have any skin in this particular game.

Disclosure (“none” means no position):None
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