In a move designed to protect its turf, Walgreens has launched a competing bid for Longs. Given the prior shareholder dissent and now a competing bidder for Longs, CVS’ original deal is in jeopardy.
Los Angeles Business Journal | September 15, 2008
If the deal goes through, Walgreens would acquire Walnut Creek-based Longs’ retail drugstores in California, Nevada, Arizona and Hawaii. The acquisition would include Longs’ prescription benefits management subsidiary, RxAmerica, LLC.
Longs’ shareholders are reportedly looking to scuttle the merger with CVS due to what they believe is an undervaluation of the firm and it real estate.
The Wall Street Journal | Heidi N. Moore | September 5, 2008
“Longs’ largest stakeholder, the investment firm Advisory Research, has renewed calls for the Walnut Creek, Calif., drugstore chain to release details about its real-estate holdings. Longs owns as much as 20% of its 500 stores, and where it doesn’t own, it holds long-term leases struck long before real-estate prices boomed…Investors say that means Longs should be fetching more than the $71.50 offered by Woonsocket, R.I.-based CVS.”
Retailers nationwide are facing the strain of shrinking consumer spending, especially now that tax rebate checks have already been spent. Therefore, the news of a significant consolidation amongst retail drugstore operators invites questions about possible redundant locations and possible store closures. Reports indicate that CVS is not considering any closures in the near term.
CPN | Michael Fickes | August 13, 2008
“In one of the year’s notable retail acquisition announcements, Longs Drug Stores Corp. has agreed to be acquired by Woonsocket, R.I.-based CVS Caremark for $2.9 billion or $71.50 per share. The purchase price includes the assumption of Longs’ outstanding debt. “
Globe St. | Brian K. Miller | August 13, 2008
“As part of the integration of the Longs chain into CVS, Ryan said CVS will look to relocate 10% to 15% of the Longs stores in Northern California that aren’t already well-located to freestanding locations “if we can find them, but there’s no rush,” he said. In addition, he said CVS would look to learn a little something from Longs about its general merchandise business, which accounts for more of the stores’ overall sales than CVS stores, and use that to improve operations at its existing CVS stores in California. “
August 15th, 2008 at 3:15 pm
CVS might have bought at the top of the market on this trade. If online pharmacies keep taking market share from bricks and mortar chains, revenues could be peaking now. After all, who gets any pleasure from visiting a drug store? Who wouldn’t prefer the convenience of a mailed Rx delivery?