Retailers, consumers and prices
Check Out Line: Long on Longs shares?
Longs, the drug store chain with a heavy concentration of stores in California, got a surprise offer from Walgreen late on Friday that topped its previous buyout agreement with rival CVS Caremark.
Longs shares opened on Monday ahead more than 5 percent to $75.80, slightly above the Walgreen offer of $75 per share and proving that investors believe they can’t lose as the two biggest U.S. pharmacy operators battle over an acquisition.
At the very least, analysts say, CVS will have to sweeten its earlier $71.50 per share bid, despite its protestations to the contrary. And that doesn’t even take into account the possibility that Walgreen will become even more aggressive to keep Longs out of its rival’s hands.
The Walgreen offer is also lending a helping hand to Longs’ two biggest shareholders, who said on Friday they wouldn’t give up their shares to CVS because the offer price was too low.
What’s clear is that even as Wall Street reels from the downfall of Lehman Brothers and a surprise buyout of Merrill Lynch, a deal for purveyors of Tylenol and toothpaste can still capture some investors attention.
Footnote: Lehman has been advising CVS on the Longs deal, along with Deutsche Bank. Curious how quickly CVS can regroup to make a higher offer, if it should choose to do so?
Also in the basket:
Best Buy nabs Napster for $121 million (Reuters)
Target gets naming rights to Minnesota Twins stadium (Reuters)
Reddy Ice suspends dividend, sends sales exec on leave (Reuters)