Deerfield, Ill.-based Walgreen Co. just opened the door for its biggest rival, CVS Caremark Corp. Late Wednesday,
Walgreen dropped its $2.8 billion bid for pharmacy chain Longs Drug Stores Corp. leaving CVS as the only bidder for Longs. In a letter to Longs' board Walgreen chairman and CEO had this to say:
In light of your repeated refusal to accept our invitation to engage in a constructive dialogue ... and the substantial deterioration in the national economic outlook over the past few weeks, we do not believe it would be in the best interests of the shareholders, customers, or employees of either Walgreens or Longs to allow this situation to remain unresolved for an extended period of time.
Walgreen made its bid one month after CVS offered $2.7 billion, or $71.50 per share, for Longs. TheDeal.com noted that Longs and CVS both said the
Walgreen deal would face too much antitrust scrutiny to proceed smoothly. Walgreen operates 6,479 drugstores in 49 states. Walnut Creek, Calif.-based Longs has more than 490 stores in California, Hawaii and Nevada.
MercuryNews.com quoted Stevan Buxbaum, an analyst with Buxbaum Group, as saying Walgreen wanted Longs primarily as a way to slow a CVS entry into Northern California -- in contrast,
CVS will be in overall expansion mode with its purchase of Longs.
"CVS is not buying these stores just to close them," he said, "CVS is buying them to clean them up. You will not see a lot of stores close. You won't see a lot of layoffs."
CVS said its deal has cleared regulatory hurdles and is fully financed. -
Baz HiralalSee the letter from WalgreenGo to the story from TheDeal.com
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