Express says proposes $26 bln takeover of Caremark

NEW YORK, Dec 18 (Reuters) U.S. pharmacy benefits manager Express Scripts Inc. said on Monday it was offering to buy rival Caremark RX for about billion, threatening to break up an offer made last month by drugstore chain CVS Corp..

Express Scripts said it was proposing paying Caremark shareholders .25 in cash and 0.426 shares in Express Scripts for every share held. Based on Express's share price on Friday, that valued Caremark at .50 a share, it said.

Express said the offer was subject to Caremark terminating its deal with CVS, adding that it was prepared to solicit proxies against approval of the proposed CVS deal.

CVS said on Nov. 1 it entered into an agreement to buy Caremark in a stock deal valuing the target at nearly billion at the time, or .48 a share.

Under that deal CVS was offering 1.67 of its shares for each share in Caremark. At Friday's price of .52, CVS's deal valued Caremark at about .97 a share.

Express said that under its proposed deal Caremark shareholders would own 57 percent of the combined company, and Express shareholders 43 percent.

In a letter adressed to Caremark's board, Express' Chief Executive Officer George Paz said the offer was a ''superior proposal'' to CVS's.

He wrote that the offer gave a ''significantly higher absolute value'' and delivered ''greater certainty of value'' because it included a cash payment.

Express said it anticipated annual cost savings of 0 million from the deal and for the transaction to be ''significantly accretive'' to earnings after the first year.

It said it had received commitments from Citigroup and Credit Suisse to fully finance the proposed transaction.

Express said the offer value of billion was based on Caremark having 436.1 million shares -- consisting of 426.5 million basic shares and 9.6 million shares from the net effect of in-the-money options.

REUTERS DKS RN1352