Longs to Walgreens: Walk On By

As I told you on Monday, the Longs Drug Stores (LDG) deal will be entertaining!

As today's Wall Street Journal headline states, Longs Drug Rebuffs Walgreen Bid to Acquire Chain. Pershing Square Capital Management, which claims a 26% economic interest in Longs, should have some choice words about this development given their opposition to the CVS deal.

Click here to read the latest SEC filing from Longs. A few interesting tidbits:

• Walgreens (WAG) initial offer (in April 2008) was $62 to 65 per share and was subsequently increased to $70.
• The main sticking point was the regulatory risk associated with antitrust review, noting “a material risk that the FTC, the Attorney General of California and possibly the Attorneys General of Hawaii and Nevada would insist on significant divestitures.”
• May and June were consumed with due diligence regarding an LDG-WAG transaction, with an apparent focus on the regulatory risk.
• Walgreens walked away on July 11 and a deal with CVS Caremark (CVS) was approved on August 12.

The filing also includes a letter from Warren Bryant, Chairman, President and Chief Executive Officer, which states in part: "[O]ur Board of Directors has determined not to furnish information to, nor have discussions and negotiations with, Walgreens.”

What’s Walgreens strategy? Do they really want Longs as much as CVS Caremark, or do they just want to block CVS Caremark from getting it?

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Check out the latest Health Wonk Review, which has an especially witty and timely “political convention style” this time around. Your friendly neighborhood blogger is represented with my post on generic drug profits.