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    CVS Restates Commitment to Caremark Merger

    WOONSOCKET, R.I. - In the face of a hostile bid by Express Scripts, Inc. for fellow pharmacy benefits manager (PBM) Caremark Rx, Inc., CVS Corp. here yesterday reiterated its "firm commitment" to completing a proposed merger with Nashville, Tenn.-based Caremark.

    WOONSOCKET, R.I. - In the face of a hostile bid by Express Scripts, Inc. for fellow pharmacy benefits manager (PBM) Caremark Rx, Inc., CVS Corp. here yesterday reiterated its "firm commitment" to completing a proposed merger with Nashville, Tenn.-based Caremark.

    According to CVS, the companies are on track to close the transaction as early as the first quarter of 2007, which would result in "the nation's largest and best positioned integrated pharmacy services provider."

    Maryland Heights, Mo.-based Express Scripts earlier this week sent a letter to Caremark shareholders, advising them to reject CVS' buyout bid as detrimental to their ultimate financial interests, according to published reports. Express Scripts noted in the letter that unlike itself, CVS has little experience in acquiring and integrating a large PBM.

    Said CVS chairman, president, and c.e.o. Tom Ryan in a statement: "The Express Scripts offer, which would reduce the number of major competitors in the PBM industry from three to two, carries significant antitrust risk that would substantially delay closing of the transaction and could well prevent it from ever being approved. Additionally, as one of the most leveraged public companies in health care services, a combined Express Scripts/Caremark would have diminished financial flexibility that would impact the company's ability to invest in the business and pursue other strategic opportunities, particularly in the event of likely client defections."

    Ryan additionally noted the bid's "significant cost synergies, which we have conservatively estimated at $400 million, [and] significant opportunities to drive incremental revenues that only a drug store/PBM combination can achieve."

    Among the benefits to be expected as a result of the merger, according to Ryan, are "a truly integrated information network that promotes formulary compliance and the appropriate utilization of drug therapies[;] the nation's most comprehensive mail- and retail-based specialty pharmacy offering[;] providing consumers with the choice of obtaining their medication in-store, by mail, or over the web; and...offering consumers disease management and other personalized services in-store via our more than 20,000 pharmacists and MinuteClinic nurse practitioners."

    The Hart-Scott-Rodino waiting period for the CVS/Caremark transaction has already expired, and the companies filed their joint proxy statement with the U.S. Securities and Exchange Commission last month.

    PBMs run drug benefit programs for health insurers and employers. Via their mail-order and specialty pharmacy division, they also dispense drugs directly to patients.

    CVS operates over 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia.

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