$26 B Offer for Caremark

Elena
18 Dec, 2006
New York City

Express Scripts, which is a small company with a market capitalization of $9.3 billion, and debt of around $1.6 billion, said it would pay $29.25 in cash and 0.426 shares in Express Scripts for each share of Caremark.

[R]8:15AM Express Scripts to offer $26 billion for Caremark.[/R]
Pharmacy-benefit manager Express Scripts Inc. ((ESRX)) announced a $26 billion cash-and-stock acquisition bid for Caremark Rx Inc ((CMX)), making an effort to break up the already existing company''s takeover deal with drug chain CVS Corp. Pharmacy-benefit managers control the flow of medications through retail stores and health institutions.

Express Scripts is a small company with a market capitalization of $9.3 billion, and debt of around $1.6 billion. It said it would pay $29.25 in cash and 0.426 shares in Express Scripts for each share of Caremark. The deal would value Caremark at $58.50 a share. The transaction awarded no premium to Caremark''s shareholders. On Friday, Caremark''s shares closed at $50.30 on the NYSE. The offer could start struggle for Caremark at a time when the company's deal with CVS was gaining credibility in the market. For the first six months of the year, Caremark reported net income of $483.9 million on revenue of $18.35 billion.


[R]7:30AM Asian markets rose on Monday, helped by gains in Japanese exporters.[/R]
Asian markets advanced on Monday. The Nikkei 225 Index in Japan advanced 0.3% to 16,962.11. Exporter Honda advanced 2.6%, while camera and chip-equipment maker Nikon gained 1.2%. Toyota also added 1.5% after the a newspaper report claimed the auto maker plans to build 9.45 million vehicles world-wide in 2007, a rise of 400,000 over 2006. Toshiba jumped 1.3% after a weekend announcement that its U.S.-based Westinghouse Electric unit cut a deal to build four nuclear power plants in China.

The Hang Seng Index in Hing Kong advanced 0.4% to 1919,2.91. China Mobile gained on speculation that China will soon issue 3G wireless licenses. It finished 1.9% higher. China Life, surged 10.2% after Merrill Lynch lifted its price target. Hutchison Whampoa restricted the market gains, shedding 0.8% as speculation it would sell its 3G wireless operations in Europe faded away.

Australia S&P ASX/200 gained 0.3% to 5,591.50, despite miners being broadly lower, tracking falls in industrial metals prices. Shares of BHP Billiton shed 1.4%, while the other large-cap Rio Tinto declined 1.1%. Share indexes in South Korea gained 0.8%, while New Zealand NZX-50 Index fell 0.01% to 3,991.88. Taiwan Weighted Price Index advanced 1.1% to 7,624.62, and Singapore Straits Times Index advanced 1.1% to 2,963.44. China Shanghai Composite Index also gained 2.6% to 2,332.43.


[R]6:30AM European markets gained on Monday supported by Norsk and Statoil deal.[/R]
European markets were broadly higher on Monday. By mid morning, the FTSE 100 in London was flat at 6,259.3, Frankfurt Xetra Dax gained 0.2 % to 6,599.51 while the CAC 40 in Paris retreated 0.1 % to 5,535.67.

Advancers

Norsk Hydro of Norway gained 24.2% and Statoil gained 3% after the companies agreed to merge their oil and gas activities, creating a national champion with combined production of 1.9 million barrels a day. The merged company would become the largest offshore energy producer in the world.

Italian carmaker and industrial group Fiat advanced 2.2% after official of the company stated that it would pursue international alliances. Volkswagen advanced 1.6% as the battle for control of the German carmaker heated. Press reports revealed the state premier of Lower Saxony is to meet leading institutional investors to gauge whether to oppose a likely decision by Porsche, largest shareholder of VW. Shares in Porsche rose 1%.

Atlas Copco rose 2.5% after Deutsche Bank announced it was resuming coverate of the stock with a buy. Dutch computer services company Getronics gained 4.2% after it was reported that Telefónica, the Spanish telecoms group, was considering a bid approach.

Decliners

BT Group declined 2.1% following its statement that under more conservative valuation standards, its pension scheme deficit at Dec. 31, 2005, was 3.4 billion pounds. Also, Tate & Lyle dipped 3% after it said that sugar pricing is unlikely to recover in Europe in 2007. Irish banks declined as investors took profits after a recent strong trading. Allied Irish shed 1.6%, while Bank of Ireland lost 1.4%.

Oil and gold

Oil prices declined from highs last week but was above $63 a barrel in early Monday trading. Light sweet crude oil for January delivery fell 29 cents to $63.14 as traders cashed in on gains last week. February Brent crude at London ICE Futures exchange retreated 24 cents to trade at $63.25 a barrel.

Gold traded in London at $617.50 per troy ounce, down from $622.83 late Friday. In Zurich, gold traded at $615.60, down from $621.70.

Currencies

The U.S. dollar was broadly down against other major currencies in European trading Monday morning. The euro traded at $1.3089, up from $1.3078 late Friday. The British pound traded at $1.9489, lower from $1.9503. The dollar bought 117.72 Japanese yen, down from 118.16.