Walgreens to take buyout offer straight to Longs stockholders
DEERFIELD, Ill. and WALNUT CREEK, Calif. Longs Drug Stores may have rebuffed Walgreens’ unsolicited bid to acquire the chain but Walgreens maintains that it will continue to move forward and is prepared to go directly to Longs’ stockholders.
“Our proposal is compelling—it would deliver superior value to Longs stockholders relative to the CVS transaction and can be consummated without undue delay. We again request that we be given an opportunity to conduct customary due diligence pursuant to the terms of your agreement with CVS as soon as possible,” stated Jeff Rein, chairman and chief executive officer of Walgreens, in a letter sent to Warren Bryant, Longs chairman, president and chief executive officer. “Although we would unquestionably prefer to work directly with you to complete a negotiated transaction, we are prepared to take our transaction directly to your stockholders.”
As previously reported by Drug Store News, Walgreens has come forward with an unsolicited, non-binding bid to buy Longs for nearly $3 billion in cash and debt assumption, a move that aims to quash a takeover agreement Longs management had already approved with CVS.
CVS announced in mid-August that it plans to buy for $2.9 billion, including debt, Longs’ 521 retail locations in California, Hawaii, Nevada and Arizona, as well as its PBM services. On Sept. 5, the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act expired, satisfying a condition to the closing of CVS’ offer.
While Walgreens’ offer, which is subject to regulatory approvals and the completion of due diligence, represents a $3.50 per share premium over the cash purchase price to be paid to Longs shareholders under the proposed acquisition by CVS, the bid from Walgreens immediately raised the eyebrows of several industry analysts given the likely regulatory hurdles and the potential for substantial store divestitures. It is apparent that Longs management also has its share of concerns.
Responding to Rein’s letter, Longs issued a statement early Tuesday stating that it still has no interest to furnish information to, nor have discussions and negotiations with Walgreens.
“As we indicated on Sept. 17, the Longs board of directors determined not to furnish information to, nor have discussions and negotiations with Walgreens. The Walgreens letter of Sept. 22 has no changes to its unsolicited, non-binding expression of interest,” Longs stated.
In making its determination, Longs board considered, among other factors:
- Walgreens previously reviewed the potential for a transaction with Longs and was not and is not now proposing to accept inherent regulatory risks.
- Walgreens has not presented a clear roadmap to completion. Assuming that regulatory approvals could be obtained, Longs’ management estimates the approval process could take nine to 12 months.
- Walgreens is not proposing to compensate Longs stockholders for delays in consummating a transaction. Meanwhile, CVS Caremark has already obtained all required regulatory approvals.
- Walgreens assumes limited antitrust risk and does not provide comparable certainly of consummation to the CVS transaction.
- Walgreens’ bid is a non-binding, conditioned on diligence and is not financed.
Walgreens security expert testifies as Congress mulls retail crime bills
ALEXANDRIA, Va. The federal government should crack down harder on organized criminal activity against retailers with stiffer penalties and tougher oversight, a Walgreens representative told Congress today.
Addressing the U.S. House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security, Walgreens security expert Frank Muscato discussed the growing problem of organized retail theft and its impact on chain drug stores. His testimony came as Congress mulls three bills aimed at combating organized retail crime, or ORC.
“ORC is an extremely sophisticated and coordinated crime,” Muscato told the House panel. “It involves highly structured organizations and gangs that hire and control teams of thieves to steal merchandise in large quantities.
“The legislation currently being considered would make ORC a federal criminal offense, which would be extremely helpful in prosecuting more of these large, multi-jurisdictional cases,” Muscato added. “ORC is not garden variety shoplifting. It is organized crime and should be treated as such with stronger penalties and enforcement.”
Organized crime drains more than $30 billion a year from retail business, according to the National Association of Chain Drug Stores, resulting in increased costs for merchants, higher prices for consumers, and lost tax revenue for state and local governments. “These crimes are perpetrated by sophisticated crime rings that often use the proceeds to fund other criminal activity,” NACDS noted.
The hearing examined three bills that would combat organized retail crime: H.R. 6713, the “E-fencing Enforcement Act of 2008;” H.R. 6491, the “Organized Retail Crime Act of 2008;” and S. 3434, the “Combating Organized Retail Crime Act of 2008.” The E-fencing Enforcement Act was introduced by Rep. Robert Scott [D-Va.], chairman of the Subcommittee on Crime, Terrorism and Homeland Security.
“Organized retail crime drains businesses, harms consumers, and sustains illegal activities that jeopardize public safety,” said NACDS president and chief executive officer Steven Anderson. “We applaud Chairman Scott and his colleagues for their commitment to stopping this growing problem.”
NACDS is a member of the Coalition Against Organized Retail Crime, established to address the large-quantity theft and re-selling of products such as infant formula, over-the-counter medicines, health and beauty aids, razor blades, batteries and electronics through flea markets, pawn shops, small retail establishments, and online auction sites.
Bartell Drugs to offer vaccination program
SEATTLE In preparation for the flu season, Bartell Drugs has announced the launch of a vaccination program that includes in-store vaccinations, pre-paid FluGram cards and a new program targeting businesses.
The 56-store chain kicks off, on Oct. 1, a schedule of more than 70 in-store vaccination clinics. In addition to clinics, many stores are offering shots by appointment or on a walk-in basis. Cost for the shots is $28 and Medicare Part B is accepted.
Bartell is also the exclusive Puget Sound partner with Novartis Vaccines to offer FluGram, a pre-paid gift card that allows patient to reserve influenza vaccinations before and during the influenza season. The FluGram gift cards are available for $28 at all Bartell locations in King, Snohomish and Pierce counties.
The FluGram program is designed to make influenza vaccination more convenient and accessible. Vaccinations will be administered by a Bartell pharmacist between Oct. 1 and Dec. 31. The FluGram gift card reserves an influenza vaccination for adults (and children aged 14 to 17, with parent approval) and is valid through Dec. 31, 2008.
For the first time, the pharmacy retailer has launched a flu vaccination program for businesses and groups. Employers may take advantage of the FluGram program, providing the pre-paid vaccination cards to employees and encouraging them to visit a Bartell location on their own. As part of the initiative, the retailer has implemented a “turn-key,” on-site flu shot clinic for groups of 25 or more, including businesses and senior facilities, where Bartell’s pharmacists come to the workplace. Discounts are available depending on the number of employees.
“This is a way for businesses, large and small, to decrease sick time and lost productivity,” stated Wade Schutze, pharmacy district manager at Bartell. “Getting vaccinated against influenza also helps protect those around you who may be at higher risk from complications.”