Longs Drug Stores (NYSE: LDG) is finding itself under substantial pressure from shareholders to conduct a more comprehensive sale process after agreeing to be boughtout by CVS. Shareholders demanded that the company hire an independent advisor, solicit offers from all interested parties, and recommend the bets offer to the board and shareholders. These shareholders believe that the current $71.50 per share offer substantially undervalues the company given Walgreen's $75 per share bid.
Some shareholders, including Pershing Square, believe that the real estate value alone exceeds the price offered by CVS. The conservative valuation used by this hedge fund pegs the value at $2.9 billion or more and suggests that the company could sell for as much as $90 a share. Risk Metrics Group also recommended shareholders vote against the merger, citing concerns over Long's failure to disclose more information concerning its real estate portfolio.
Longs responded saying it would evaluate the offer by Walgreens but still recommended that shareholders accept the tender offer by CVS. The company had previously held talks with Walgreens, but they failed over price, according to SEC filings. The company also noted that Walgreens offer may be stuck with antitrust concerns. However, shareholders contend that the very fact this offer came in after CVS' tender means the process was badly flawed.
Related CompaniesCVS Caremark Corporation (CVS)Walgreen Company (WAG)Rite Aid Corporation (RAD)PetMed Express, Inc. (PETS)