Activist investor Bill Ackman’s efforts to thwart CVS Caremark’s buyout of Longs Drug Stores heated up yesterday when the target’s largest shareholder joined the fight and told The Post it will ask regulators to step in as referees.
Advisory Research Inc., which holds a 9.2 percent stake in Longs, is miffed, claiming shareholders haven’t been provided the information they need to properly assess CVS’ $2.9 billion offer.
At issue is Longs’ real estate holdings, whose value has yet to be fully disclosed. The California-based chain owns property associated with about 200 stores, three distribution centers and three office facilities, and CVS estimates the store locations alone are worth more than $1 billion.
“Something tells me it’s worth a little more,” Advisory Research President David Heller told The Post, noting that many of the holdings are in California. “Say it’s worth $2 billion. They’re getting $2 billion worth of real estate and paying $900 million” for the rest of the company. “It’s ridiculous.”
A spokeswoman for Longs Drug wasn’t immediately available to comment. CVS said in an e-mail statement, “We believe our offer represents a fair value for Longs.”
The outcry puts pressure on Longs to either provide the documentation or for CVS to offer more cash.
The deal to buy Longs is being done through a tender offer in which CVS gives holders $71.50 for each share until it collects enough to be crowned owner. CVS needs two-thirds – rather than the more common 50.1 percent – of the total to make things official.
Together with Ackman’s Pershing Square, which also has been agitating around this deal, the two dissidents own 18 percent of the stock. But Pershing also has significant swap ownership, which could eventually translate into shares.
Chicago-based Advisory Research added it plans to do everything it can to get the undisclosed information, including taking the company to court and calling in the Securities and Exchange Commission, Heller told The Post.