Shareholders of drugstore chain CVS Corp. voted Thursday to approve a deal to purchase pharmacy benefits manager Caremark Rx Inc. for about $26.5 billion in cash and stock.
The approval comes a day before what could be a contentious vote on the deal by Caremark shareholders. Caremark’s rival, Express Scripts Inc., put in a competing offer for the company, and some shareholders and analysts have complained CVS did not offer enough.
According to a preliminary count, CVS said 91.8 percent of the shares voted were cast in favor of the deal.
‘We’re very happy with the margin of the favorable decision by our shareholders,’ said Dave Rickard, CVS’s chief financial officer. ‘There’s one more to go.’
CVS announced in November that it would buy Nashville, Tenn.-based Caremark for $21.2 billion in stock.
The following month, Maryland Heights, Mo.-based Express Scripts put in a hostile cash and stock bid valued at about $26 billion. But Caremark’s board rejected it, citing concerns about whether the deal would pass regulatory muster because it would unite the second- and third-largest pharmacy benefits managers.
Since then, CVS has increased its offer three times and Express Scripts has increased its offer once. The Express Scripts deal is currently valued at about $27.2 billion based on Thursday morning’s share price.
CVS added cash dividends now worth $7.50 per share to its bid and has said it will make a cash tender offer of $35 a share for 150 million of the combined company’s shares once the deal is completed.
Express Scripts improved its initial bid of 0.426 shares of its own stock and $29.25 in cash per share by saying it would add 0.481 cents a day to the cash portion starting April 1 until the deal is closed.
The only voice of dissent at the CVS shareholders meeting came from Michael Garland, of the investment advisory firm CtW Investment Group, which represents union pension funds that own large blocks of Caremark stock.
Garland said half of the merged company’s board would be made up of Caremark directors, and he said they had shown they did not have shareholders’ best interests at heart when they made the deal with CVS. He pointed to the three times CVS sweetened its offer, saying that showed the original deal was not in the best interests of shareholders.
‘It looked bad from the beginning,’ he said.
Caremark has already received federal regulatory approval for its proposed acquisition by CVS. The Federal Trade Commission is still considering the Express Scripts deal.
Caremark shares rose 84 cents to $61.88 in morning trading on the New York Stock Exchange while CVS shares gained 47 cents to $32.78. Express Scripts shares fell 20 cents to $80.90 on the Nasdaq Stock Market.