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BUSINESS
Investors question price of CVS buyout of Longs
NEW YORK -- Wall Street was surprised when CVS Caremark Corp. offered $2.7 billion to buy Longs Drugs Stores Corp., but some Longs shareholders are saying they'll oppose the deal if Longs doesn't tell them more about the value of its real estate.
On Aug. 12, CVS Caremark agreed to pay $71.50 per share for Longs, gaining more than 500 stores and expanding its presence on the West Coast. CVS valued Longs' real estate at about $1 billion, citing the difficult real estate market in California, where most of Longs stores are located. But CtW Investment Group said that price is too low, by as much as $260 million, and two major Longs shareholders say they want to know more about how the real estate and leases were valued.
At an investor conference Thursday, CVS Chief Executive Tom Ryan said he believes the deal will get the necessary two-thirds shareholder approval. CVS' tender offer expires Sept. 15, although Ryan noted it can be extended for up to a year. He also said the Longs stores are more valuable to CVS than most other retailers, and not many banks and retailers are looking for sites that size.
