| Express Scripts Urges Caremark Stockholders Not to Leave Money on the Table |
Urges Caremark Stockholders to Vote GOLD Proxy Card AGAINST
The Flawed Caremark Merger Process
ST. LOUIS, March 14 /PRNewswire-FirstCall/ -- Express Scripts, Inc. (Nasdaq: ESRX) today issued an open letter to Caremark Rx, Inc. (NYSE: CMX) stockholders urging them to vote against the proposed acquisition of Caremark by CVS Corporation (NYSE: CVS). Dear Caremark Stockholder: If you want more money, you should vote against the CVS transaction. Express Scripts knows Caremark stockholders want more value. We do too. If we discover additional value during due diligence, it is only logical that we could increase our offer. In addition, we are confident that the upside potential of a combined Express Scripts-Caremark will deliver enhanced value stockholders seek. Caremark's flawed process has left money on the table. By refusing to talk to Express Scripts, the Caremark Board continues to waste opportunities to obtain the highest value for Caremark stockholders.
Don't Let the Caremark Board Leave More Money on the Table
* More value from greater synergies. If we were able to identify
additional value during confirmatory due diligence, including if we
determine that there are greater net synergies beyond what we have
reflected in our analysis thus far, it could result in an increase to
our offer price. Given that CVS and Caremark have identified $500
million of PBM-driven synergies, isn't it common sense that Express
Scripts will be able to generate even more synergies?
* More value from a better currency and greater cash component. The
Express Scripts currency is stronger and more valuable to Caremark
stockholders than a weaker CVS currency. Express Scripts has
significantly outperformed CVS since 1997, with total stockholder
returns of 1595% to 235%, respectively.
We are offering $29.25 in cash for each share of Caremark stock. On
March 7, 2007, the Company announced that it will pay additional cash
consideration of approximately 6 percent per annum on the $29.25 cash
portion of Express Scripts' offer. This increased consideration of
$0.00481 of cash per share per day will accrue commencing on April 1,
2007, through the closing date of Express Scripts' acquisition of
Caremark, or 45 days after the Company receives Federal Trade Commission
approval of the transaction, whichever comes first. In its acquisition
by CVS, Caremark stockholders would obtain only a nominal cash
consideration of which they themselves will fund 45.5%.
* More value from greater upside. We recently increased 2007 diluted
earnings per share guidance of $4.14 to $4.26 reflects growth of 26% to
29% over 2006. However, Express Scripts' stock currently trades at a
P/E multiple of 19.5 times, which is a discount to our historical P/E
multiple, which has averaged 20 to 22 times. Based on the current P/E
level and our strong outlook for the future, we believe there is
significant upside to our stock price in the short-term as well as in
the long-term.
* More value from a proven model. Horizontal combinations between PBMs
are proven value generators. The Express Scripts offer delivers you
greater and more certain value and is based on a proven model of
horizontal integration. On the other hand, history shows that the
vertical CVS/Caremark combination will destroy value. Clients pay PBMs
for the savings they are able to obtain from their management of the
pharmaceutical supply chain to drive down costs and make them more
competitive. Retail is part of that chain, making vertical
transactions illogical and value destructive.
We believe we can consummate a transaction with Caremark no later than the third quarter of 2007, and have taken a number of tangible and important steps to do so. We have committed financing, commenced an exchange offer, and nominated a slate of four independent directors to Caremark's Board. Furthermore, we have filed a proxy statement with the Securities and Exchange Commission in connection with seeking the approval of our stockholders to issue shares of Express Scripts common stock in connection with the exchange offer. We intend to announce the record date and the date of the meeting of our stockholders for the approval of the proposed share issuance as soon as practicable and expect that the meeting regarding such approval will be held in May. There is a real opportunity to create more value for Caremark stockholders. The Caremark Board must allow Express Scripts to identify and deliver additional synergies. It's now time to vote AGAINST a flawed process; a speculative, unproven vertical transaction; and less than maximum value. You must vote AGAINST the CVS merger proposal in order to benefit from a competitive bidding process. Vote the GOLD proxy card TODAY AGAINST the proposed CVS merger. Skadden, Arps, Slate, Meagher & Flom LLP, Arnold & Porter LLP, and Young Conaway Stargatt & Taylor, LLP are acting as legal counsel to Express Scripts, and Citigroup Corporate and Investment Banking and Credit Suisse are acting as financial advisors. MacKenzie Partners, Inc. is acting as proxy advisor to Express Scripts. Safe Harbor Statement This press release contains forward-looking statements, including, but not limited to, statements related to the Company's plans, objectives, expectations (financial and otherwise) or intentions. Actual results may differ significantly from those projected or suggested in any forward-looking statements. Factors that may impact these forward-looking statements include but are not limited to:
* uncertainties associated with our acquisitions, which include
integration risks and costs, uncertainties associated with client
retention and repricing of client contracts, and uncertainties
associated with the operations of acquired businesses
* costs and uncertainties of adverse results in litigation, including a
number of pending class action cases that challenge certain of our
business practices
* investigations of certain PBM practices and pharmaceutical pricing,
marketing and distribution practices currently being conducted by the
U.S. Attorney offices in Philadelphia and Boston, and by other
regulatory agencies including the Department of Labor, and various state
attorneys general
* changes in average wholesale prices ("AWP"), which could reduce prices
and margins, including the impact of a proposed settlement in a class
action case involving First DataBank, an AWP reporting service
* uncertainties regarding the implementation of the Medicare Part D
prescription drug benefit, including the financial impact to us to the
extent that we participate in the program on a risk-bearing basis,
uncertainties of client or member losses to other providers under
Medicare Part D, and increased regulatory risk
* uncertainties associated with U.S. Centers for Medicare & Medicaid's
("CMS") implementation of the Medicare Part B Competitive Acquisition
Program ("CAP"), including the potential loss of clients/revenues to
providers choosing to participate in the CAP
* our ability to maintain growth rates, or to control operating or capital
costs
* continued pressure on margins resulting from client demands for lower
prices, enhanced service offerings and/or higher service levels, and the
possible termination of, or unfavorable modification to, contracts with
key clients or providers
* competition in the PBM and specialty pharmacy industries, and our
ability to consummate contract negotiations with prospective clients, as
well as competition from new competitors offering services that may in
whole or in part replace services that we now provide to our customers
* results in regulatory matters, the adoption of new legislation or
regulations (including increased costs associated with compliance with
new laws and regulations), more aggressive enforcement of existing
legislation or regulations, or a change in the interpretation of
existing legislation or regulations
* increased compliance relating to our contracts with the DoD TRICARE
Management Activity and various state governments and agencies
* the possible loss, or adverse modification of the terms, of
relationships with pharmaceutical manufacturers, or changes in pricing,
discount or other practices of pharmaceutical manufacturers or
interruption of the supply of any pharmaceutical products
* the possible loss, or adverse modification of the terms, of contracts
with pharmacies in our retail pharmacy network
* the use and protection of the intellectual property we use in our
business
* our leverage and debt service obligations, including the effect of
certain covenants in our borrowing agreements
* our ability to continue to develop new products, services and delivery
channels
* general developments in the health care industry, including the impact
of increases in health care costs, changes in drug utilization and cost
patterns and introductions of new drugs
* increase in credit risk relative to our clients due to adverse economic
trends
* our ability to attract and retain qualified personnel
* other risks described from time to time in our filings with the SEC
Risks and uncertainties relating to the proposed transaction that may impact forward-looking statements include but are not limited to:
* Express Scripts and Caremark may not enter into any definitive agreement
with respect to the proposed transaction
* required regulatory approvals may not be obtained in a timely manner, if
at all
* the proposed transaction may not be consummated
* the anticipated benefits of the proposed transaction may not be realized
* the integration of Caremark's operations with Express Scripts may be
materially delayed or may be more costly or difficult than expected
* the proposed transaction would materially increase leverage and debt
service obligations, including the effect of certain covenants in any
new borrowing agreements.
We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Important Information Express Scripts has filed a proxy statement and proxy supplement in connection with Caremark's special meeting of stockholders at which the Caremark stockholders will consider the CVS Merger Agreement and matters in connection therewith. Express Scripts stockholders are strongly advised to read that proxy statement and proxy supplement and the accompanying form of GOLD proxy card, as they contain important information. Express Scripts has also filed a preliminary proxy statement in connection with a special meeting of Express Scripts stockholders to approve the issuance of additional shares of Express Scripts common stock to be used in the potential acquisition of Caremark and intends to file a proxy statement in connection with Caremark's annual meeting of stockholders at which the Caremark stockholders will vote on the election of directors to the board of directors of Caremark. Express Scripts stockholders are strongly advised to read these proxy statements and the accompanying proxy cards when they become available, as each will contain important information. Stockholders may obtain each proxy statement, proxy card and any amendments or supplements thereto which are or will be filed with the Securities and Exchange Commission ("SEC") free of charge at the SEC's website (www.sec.gov) or by directing a request to MacKenzie Partners, Inc., at 800-322-2885 or by email at expressscripts@mackenziepartners.com. In addition, this material is not a substitute for the prospectus/offer to exchange and registration statement that Express Scripts has filed with the SEC regarding its exchange offer for all of the outstanding shares of common stock of Caremark. Investors and security holders are urged to read these documents, all other applicable documents, and any amendments or supplements thereto when they become available, because each contains or will contain important information. Such documents are or will be available free of charge at the SEC's website (www.sec.gov) or by directing a request to MacKenzie Partners, Inc., at 800-322-2885 or by email at expressscripts@mackenziepartners.com. Express Scripts and its directors, executive officers and other employees may be deemed to be participants in any solicitation of Express Scripts or Caremark shareholders in connection with the proposed transaction. Information about Express Scripts' directors and executive officers is available in Express Scripts' proxy statement, dated April 18, 2006, filed in connection with its 2006 annual meeting of stockholders. Additional information about the interests of potential participants is included in the proxy statement filed in connection with Caremark's special meeting to approve the proposed merger with CVS and will be included in any proxy statement regarding the proposed transaction. We have also filed additional information regarding our solicitation of stockholders with respect to Caremark's annual meeting on a Schedule 14A pursuant to Rule 14a-12 on January 9, 2007. About Express Scripts Express Scripts, Inc. is one of the largest PBM companies in North America, providing PBM services to over 50 million members. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union-sponsored benefit plans. Express Scripts provides integrated PBM services, including network- pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost- management and patient-care services. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at www.express-scripts.com, which includes expanded investor information and resources.
Investor Contacts:
Edward Stiften, Chief Financial Officer
David Myers, Vice President, Investor Relations
(314) 702-7173
Media Contacts:
Steve Littlejohn, VP, Public Affairs
(314) 702-7556
Laurie Connell
MacKenzie Partners, Inc.
(212) 929-5500
Joele Frank / Jamie Moser
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
SOURCE Express Scripts, Inc.
-0- 03/14/2007
/CONTACT: Investors - Edward Stiften, Chief Financial Officer David
Myers, Vice President, Investor Relations, +1-314-702-7173, Media - Steve
Littlejohn, VP, Public Affairs, +1-314-702-7556; Laurie Connell, MacKenzie
Partners, Inc., +1-212-929-5500; Joele Frank or Jamie Moser, both of Joele
Frank, Wilkinson Brimmer Katcher, +1-212-355-4449/
/Web site: http://www.express-scripts.com /
(ESRX CMX CVS)
CO: Express Scripts, Inc.; Caremark Rx, Inc.
ST: Missouri
IN: HEA REA
SU: TNM
DO
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9285 03/14/2007 13:45 EDT http://www.prnewswire.com
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