CVS sticks with Lehman in Longs

It's open season on Lehman Brothers Holdings Inc., with Wall Street rivals trying to cherry pick its best talent and clients. But one client apparently staying put is CVS Caremark Corp. As the drugstore giant battled with Walgreen Co. for the hand of Longs Drug Stores Corp., it continued to get financial advice from Lehman's new owner, Barclays Capital, where the team is still led by Lehman's Andrew Taussig.

Taussig has been working on the Longs situation at least since August, when CVS agreed to buy the Walnut Creek, Calif.-based drugstore chain for $2.9 billion in cash. Walgreen made an unsolicited $3 billion counterbid for Longs on Sept. 12, the Friday before Lehman's weekend collapse. But through Lehman's bankruptcy and sale to Barclays, Woonsocket, R.I.-CVS has kept the firm onboard, alongside Deutsche Bank AG's Keith Wargo and Keith Pelt, who also worked on the initial Longs deal. The CVS relationship with Deutsche is a new one.

Taussig joined Lehman from Credit Suisse Group in 2005 and brought a close relationship with CVS CEO Tom Ryan with him. He advised CVS in last year's $25.5 billion acquisition of Caremark Rx Inc. and helped bring the drugstore chain into the SuperValu Inc. bidding consortium that ultimately bought Albertson's Inc. for $17.4 billion in 2006. (In that battle, Taussig was hired by an investment group led by Cerberus Capital Management LP that included Kimco Realty Corp., Schottenstein Realty Co., Lubert-Adler Partners LP and Klaff Realty LP.) Taussig also worked for CVS in its purchase of Minneapolis-based MinuteClinic, the biggest operator of walk-in health clinics located in retail stores, for an undisclosed amount in 2006. When he was at Credit Suisse First Boston, Taussig was on J.C. Penney Co.'s side when it sold drugstore Eckerd Corp. to Jean Coutu Group (PJC) Inc. and CVS for $4.5 billion in 2004.

CVS is getting legal advice from Davis Polk & Wardwell's Louis Goldberg, John Amorosi, Michael Mollerus, Barbara Nims, Edmond FitzGerald and James Florack in New York. The firm has done corporate work for CVS since it was spun out from Davis Polk client Melville Corp. in the 1990s and has served on the Caremark, Albertson's and Eckerd deals.

For advice on medical regulatory matters, CVS is once again turning to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC as it did in Caremark and Eckerd. Partners Bruce Sokler, Susan Berson, Stephen Friedberg, David Alin and Susan Phillips worked on the Longs Drug Stores transaction.

Longs, for its part, is getting financial advice from former Bear Stearns Cos. banker Charles Edelman, who is now at J.P. Morgan Securities Inc. Edward Herlihy, David Shapiro, Jeannemarie O'Brien, Joseph Larson and Joshua Holmes from Wachtell, Lipton, Rosen & Katz in New York are providing legal advice.

Deerfield, Ill.-based Walgreen, which appears to be giving in to CVS, is being advised by Goldman, Sachs & Co., a firm that traditionally worked defense on unsolicited bids, but played offense here. Goldmanites on the deal include Stephan Feldgoise, John Gilbertson, Jason Dubinsky and Timothy Ingrassia. For counsel, Walgreen tapped Weil, Gotshal & Manges LLP, which also represented it in its $278 million acquisition of I-trax Inc. and in its purchase of Option Care Inc. for $850 million in 2007.