Walgreens pulls bid for Longs

DEERFIELD, Ill. —Walgreens has withdrawn its bid to snap up Longs Drug Stores, citing repeated refusals by Longs’ management to have a discussion and the deterioration of the economy in recent weeks. The move is one more indication that CVS Caremark will, in fact, close the deal.

“In light of your repeated refusal to accept our invitation to engage in a constructive dialogue that could lead to a mutually beneficial transaction and the substantial deterioration in the national economic outlook over the past few weeks, we do not believe it would be in the best interests of the shareholders, customers or employees of either Walgreens or Longs to allow this situation to remain unresolved for an extended period of time,” stated Walgreens chairman and chief executive officer Jeff Rein in a letter sent earlier this month to Longs chairman, president and chief executive officer Warren Bryant. Since Walgreens stepped forward at the 11th hour in September with its unsolicited bid to acquire Longs and attempt to pull the plug on the deal that Longs’ management already had reached with CVS, the twists and turns have been plentiful.

Walgreens’ proposed bid immediately raised the eyebrows of several industry analysts—and Longs’ management—given the likely regulatory hurdles and substantial store divestitures.

Longs twice rebuffed Walgreens’ unsolicited bid to acquire the chain, but Walgreens maintained—at least until now—that it was prepared to go directly to Longs’ stockholders.

Stepping in to challenge Longs’ antitrust arguments was CtW Investment Group, which stated that it had hired a law firm to analyze the potential Walgreens/Longs deal, which concluded no significant risks or antitrust concerns should exist.

According to CVS, the antitrust analysis, however, was riddled with “inaccuracies and analytic deficiencies.”