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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 1/09/07 CVS Corp S-4/A 7:214 Davis Polk & Ward..01/FA
Document/Exhibit Description Pages Size
1: S-4/A Pre-Effective Amendment to Registration of HTML 1,549K
Securities Issued in a
Business-Combination Transaction
2: EX-23.1 Consent of Experts or Counsel HTML 5K
3: EX-23.2 Consent of Experts or Counsel HTML 5K
4: EX-23.3 Consent of Experts or Counsel HTML 5K
5: EX-24.1 Power of Attorney HTML 12K
6: EX-99.1 Miscellaneous Exhibit HTML 13K
7: EX-99.2 Miscellaneous Exhibit HTML 16K
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| As filed with the Securities and Exchange Commission on January 9, 2007 |
| Registration No. 333-139470 |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
|
|
| AMENDMENT NO. 1 |
| TO |
| Form S-4 |
| REGISTRATION STATEMENT |
| UNDER |
| THE SECURITIES ACT OF 1933 |
|
|
| CVS CORPORATION | ||
| (Exact Name of Registrant as Specified in Its Charter) | ||
| Delaware | 5912 | 05-0494040 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
| One CVS Drive | ||
| Woonsocket, RI 02895 | ||
| (401) 765-1500 | ||
| (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices) | ||
| David B. Rickard | ||
| Executive Vice President and Chief Financial Officer | ||
| CVS Corporation | ||
| One CVS Drive | ||
| Woonsocket, RI 02895 | ||
| (401) 765-1500 | ||
| (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) | ||
| Douglas A. Sgarro, Esq. | Louis Goldberg, Esq. | Sara J. Finley, Esq. | Michael J. O’Brien, Esq. |
| Executive Vice President-Strategy and | John D. Amorosi, Esq. | Senior Vice President, Secretary and | Tracey A. Zaccone, Esq. |
| Chief Legal Officer | Davis Polk & Wardwell | Assistant General Counsel | King & Spalding LLP |
| CVS Corporation | 450 Lexington Avenue | Caremark Rx, Inc. | 1185 Avenue of the Americas |
| One CVS Drive | New York, NY 10017 | 211 Commerce Street | New York, NY 10036 |
| Woonsocket, RI 02895 | (212) 450-4000 | Suite 800 | (212) 556-2100 |
| (401) 765-1500 | Nashville, TN 37201 | ||
| (615) 743-6600 | |||
|
|
|||
Approximate
date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this registration statement
and the effective time of the merger (the “Merger”) of Twain MergerSub Corp.,
a Delaware corporation formed for the purpose of the Merger and a wholly owned
subsidiary of CVS Corporation, a Delaware corporation, with and into Caremark
Rx, Inc., as described in the Agreement and Plan of Merger, dated as of November
1, 2006, attached as Annex A to the joint proxy statement/prospectus forming
part of this registration statement. |
| CALCULATION OF REGISTRATION FEE |
|
Title of Each Class of Securities To Be Registered |
Amount To Be Registered(1) |
Proposed Maximum Offering Price Per Unit |
Proposed Maximum Aggregate Offering Price(2) |
Amount of Registration Fee(2) |
| Common Stock, par value $0.01 per share | 745,887,633 | N/A | $22,233,705,898 | $2,379,007 |
| (1) | Represents the maximum number of shares of common stock, with par value $0.01 per share, of CVS Corporation (“CVS Common Stock”) estimated to be issuable upon completion of the Merger, based on the exchange ratio of 1.670 shares of CVS Common Stock for each share of common stock, par value $0.001 per share, of Caremark Rx, Inc. (“Caremark Common Stock”) (based on 426,541,731 shares of Caremark Common Stock outstanding on December 14, 2006 and 20,097,600 shares of Caremark Common Stock issuable pursuant to the exercise of Caremark options and warrants outstanding on December 14, 2006). |
| (2) | Previously paid in connection with the initial filing of this registration statement on December 19, 2006. Estimated solely for the purpose of calculating the amount of the registration fee required by Section 6(b) of the Securities Act of 1933 (the “Securities Act”), and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act, the proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Caremark Common Stock (the securities to be cancelled in the merger) in accordance with Rule 457(c) under the Securities Act as follows: the product of (1) $49.78 the av erage of the high and low prices per share of Caremark Common Stock on December 12, 2006 as quoted on the New York Stock Exchange, multiplied by (2) 446,639,331, the sum of the aggregate number of shares of Caremark Common Stock outstanding as of December 14, 2006 and the aggregate number of shares of Caremark Common Stock issuable upon exercise of Caremark options and warrants. |
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The information in this joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
SUBJECT TO COMPLETION, DATED JANUARY 9, 2007
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MERGER PROPOSED – YOUR VOTE IS VERY IMPORTANT
The boards of directors of CVS Corporation and Caremark Rx, Inc. have each approved a merger agreement which provides for the combination of the two companies in a transaction structured as a merger of equals. The boards of directors of CVS and Caremark believe that the combination of the two companies will be able to create substantially more long-term stockholder value than either company could individually achieve. Following the completion of the merger, Caremark will be a wholly owned subsidiary of CVS and Caremark stockholders will own approximately 45.5% of the outstanding common stock of the combined company and CVS stockholders will own approximately 54.5% of the outstanding common stock of the combined company, in each case, on a fully diluted basis. CVS Corporation is referred to as CVS and Caremark Rx, Inc. is referred to as Caremark.
The combined company will be named CVS/Caremark Corporation and the shares of the combined company will be traded on the New York Stock Exchange, or the NYSE, under the symbol “CVS”.
If the merger is completed, Caremark’s stockholders will receive 1.670 shares of common stock of CVS/Caremark, for each share of Caremark common stock that they own immediately before the effective time of the merger. Caremark stockholders will receive cash for any fractional shares which they would otherwise receive in the merger. CVS stockholders will continue to own their existing shares after the merger. CVS common stock is traded on the NYSE under the symbol “CVS”. On [•], 2007, the last practicable day before the mailing of this document, the closing price per share of CVS common stock as reported by the NYSE was $[•].
CVS and Caremark estimate that CVS will issue approximately 712.3 million shares of CVS/Caremark common stock in the merger based on the number of shares of Caremark common stock outstanding on January 5, 2007, and will reserve an additional approximately 33.5 million shares of CVS/Caremark common stock for issuance in connection with CVS/Caremark’s assumption of Caremark’s outstanding options and warrants.
YOUR VOTE IS IMPORTANT. The merger cannot be completed unless, among other things, holders of Caremark common stock vote to adopt the merger agreement and approve the merger, and holders of CVS common stock and CVS Series One ESOP Convertible Preference Stock, voting together as a single class, approve the amendments to CVS’ charter and approve the issuance of CVS/Caremark common stock in the merger.
The CVS board of directors unanimously recommends that CVS stockholders vote “FOR” the amendments to the CVS charter to increase the authorized number of shares and to change the name of CVS to “CVS/Caremark Corporation” and “FOR” the issuance of CVS/Caremark common stock to Caremark stockholders in the merger. The Caremark board of directors unanimously recommends that Caremark stockholders vote “FOR” the adoption of the merger agreement and the approval of the merger.
CVS and Caremark will each hold a special meeting of their respective stockholders to vote on these proposals. Whether or not you plan to attend your company’s special meeting, please take the time to vote by completing and mailing the enclosed proxy card or submitting your proxy by telephone or through the Internet, using the procedures in the proxy voting instructions included with your proxy card. Even if you return the proxy, you may attend the special meeting and vote your shares in person.
This document describes the proposed merger and related transactions in more detail. CVS and Caremark encourage you to read this entire document carefully, including the merger agreement, which is included as Annex A, and the section discussing “Risk Factors” relating to the merger beginning on page 25.
CVS and Caremark look forward to the successful combination of the two companies.
| Thomas M. Ryan | E. Mac Crawford | |
| Chairman, President and Chief Executive Officer, | Chairman, President and Chief Executive Officer, | |
| CVS Corporation | Caremark Rx, Inc. |
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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger described in this joint proxy statement/prospectus or the CVS/Caremark common stock to be issued pursuant to the merger or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. |
This joint proxy statement/prospectus is dated January 9, 2007 and, together with the accompanying proxy card, is first being mailed or otherwise delivered to stockholders of CVS and Caremark on or about [•], 2007.
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THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES ADDITIONAL INFORMATION
This document incorporates by reference important business and financial information about CVS and Caremark from other documents filed with the Securities and Exchange Commission, which is referred to as the SEC, that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. For a list of the documents incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 148. You can obtain electronic or hardcopy versions of the documents that are incorporated by reference into this document, without charge, from the Investor Relations section of each company’s website or by requesting them in writing or by telephone as set forth below:
| if you are a CVS stockholder: | if you are a Caremark stockholder: | |||||
| Electronic: | www.cvs.com (please see “Financial | Electronic: | www.caremarkrx.com (please see “SEC | |||
| Information” page or “Contact Us” | Filings” page or “Request Document” page | |||||
| page in the Investor Relations portion | in the Investor Relations portion of the | |||||
| of the site) | site) | |||||
| By Mail: | CVS Corporation | By Mail: | Caremark Rx, Inc. | |||
| One CVS Drive | 211 Commerce Street, Suite 800 | |||||
| Woonsocket, RI 02895 | Nashville, TN 37201 | |||||
| Attention: Investor Relations | Attention: Investor Relations | |||||
| E-mail Address: investorinfo@cvs.com | E-mail Address: | |||||
| investorinfo@caremark.com | ||||||
| By Telephone: | (800) 201-0938 | By Telephone: | (800) 633-9509 | |||
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [•], 2007 IN ORDER TO RECEIVE THEM BEFORE YOUR SPECIAL MEETING.
VOTING ELECTRONICALLY, BY TELEPHONE OR BY MAIL
CVS stockholders of record on [•], 2007 may submit their proxies:
Caremark stockholders of record on [•], 2007 may submit their proxies:
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If you are a beneficial owner, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [•], 2007
Dear Stockholder:
A special meeting of stockholders of CVS Corporation will be held on [•], 2007 at [•] a.m., Eastern Time, at CVS’ corporate headquarters, One CVS Drive, Woonsocket, Rhode Island 02895.
The purpose of the CVS special meeting is to consider and to vote upon the following proposals:
The CVS board of directors has unanimously determined that the amendments to the CVS charter and the share issuance are advisable and in the best interests of CVS and its stockholders and recommends that CVS stockholders vote “FOR” the amendments to the CVS charter, “FOR” the issuance of CVS/Caremark common stock to Caremark stockholders in the merger and “FOR” the adjournment or postponement of the special meeting, including if necessary, to solicit additional proxies in favor of the amendments and issuance.
CVS and Caremark cannot complete the merger unless:
Your failure to vote will have the same effect as a vote against the approval of the CVS charter amendments and will make it more difficult to obtain the necessary quorum for purposes of approving the share issuance. Therefore, your vote is very important.
The close of business on [•], 2007 has been fixed as the record date, which is referred to as the CVS record date, for the determination of CVS stockholders entitled to notice of, and to vote at, the CVS special meeting or any adjournments or postponements of the CVS special meeting. Only holders of CVS common stock and holders of CVS Series One ESOP Convertible Preference Stock of record at the close of business on [•], 2007 are entitled to notice of, and to vote at, the CVS special meeting or any adjournments or postponements of the CVS special meeting. All CVS Series One ESOP Convertible Preference Stock, which is referred to as the CVS ESOP preference stock, is held by the Bank of New York, as Trustee under the 401(k) Plan and the Employee Stock Ownership Plan of CVS Corporation and Affiliated Companies, which is referred to as the CVS Plan. The CVS Plan consists of both a 401(k) Plan and an Employee Stock Ownership Plan. Each participant in the CVS Plan instructs the trustee of the CVS Plan how to vote his or her shares of (i) CVS ESOP preference stock and (ii) CVS common stock held in the CVS Plan. Unallocated shares of CVS ESOP preference stock and CVS common stock held in the CVS Plan and shares of CVS ESOP preference stock and CVS common stock held in the CVS Plan with respect to which the trustee of the CVS Plan receives no timely voting instructions will be voted by the trustee of the CVS Plan in the same proportion as it votes all the shares as to which such trustee has received timely voting instructions. A list of the holders of CVS common stock entitled to vote at the CVS special meeting will be available for examination by any CVS stockholder, for any purpose germane to the CVS special meeting, at CVS’ principal executive offices at One CVS Drive, Woonsocket, Rhode Island 02895, for ten days before the CVS special meeting, between the hours of 9:00 a.m. and 3:00 p.m., and at the CVS special meeting during the entire time of the meeting.
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We direct your attention to the joint proxy statement/prospectus accompanying this notice for a more complete statement regarding the matters proposed to be acted upon at the meeting. We encourage you to read the entire joint proxy statement/prospectus carefully, including the merger agreement, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 25.
SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE CVS SPECIAL MEETING, PLEASE VOTE AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO VOTE YOUR PROXY ARE FOUND ON THE ENCLOSED WHITE PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE CVS SPECIAL MEETING. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY!
| By Order of the Board of Directors, | |
| Thomas M. Ryan | |
| Chairman, President and Chief Executive Officer |
[•], 2007
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [•], 2007
Dear Caremark Stockholder:
Caremark is pleased to invite you to attend a special meeting of the stockholders of Caremark Rx, Inc. which will be held on [•], 2007 at [•] a.m., Central Time, at Caremark’s corporate headquarters at 211 Commerce Street, Suite 800, Nashville, Tennessee 37201.
The purpose of the Caremark special meeting is to consider and to vote upon the following proposals:
The Caremark board of directors has unanimously determined that the merger agreement and the transactions contemplated by it, including the merger, are advisable and in the best interests of Caremark and its stockholders, unanimously approved and adopted the merger agreement and the transactions contemplated by it, including the merger, and recommends that the Caremark stockholders vote “FOR” the adoption of the merger agreement and the approval of the merger and “FOR” the adjournment or postponement of the Caremark special meeting, including if necessary, to solicit additional proxies in favor of such adoption and approval.
CVS and Caremark cannot complete the merger unless the proposal to adopt the merger agreement and to approve the merger is approved by holders of a majority of the outstanding shares of Caremark common stock entitled to vote at the Caremark special meeting.
Your failure to vote will have the same effect as a vote against the adoption of the merger agreement and the approval of the merger. Therefore, your vote is very important.
The close of business on [•], 2007 has been fixed as the record date, which is referred to as the Caremark record date, for the determination of Caremark stockholders entitled to notice of, and to vote at, the Caremark special meeting or any adjournments or postponements of the Caremark special meeting. Only holders of record of Caremark common stock at the close of business on the Caremark record date are entitled to notice of, and to vote at, the Caremark special meeting. A complete list of stockholders entitled to vote at the Caremark special meeting will be available for examination by any of Caremark’s stockholders at Caremark’s headquarters at 211 Commerce Street, Suite 800, Nashville, Tennessee 37201 for purposes pertaining to the Caremark special meeting, during normal business hours, for a period of 10 days before the Caremark special meeting, and at the time and place of the Caremark special meeting.
We direct your attention to the joint proxy statement/prospectus accompanying this notice for more detailed information regarding the matters proposed to be acted upon at the Caremark special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, which is included as Annex A to the joint proxy statement/prospectus, and “Risk Factors” beginning on page 25 of the joint proxy statement/prospectus.
SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE CAREMARK SPECIAL MEETING, PLEASE VOTE AS SOON AS POSSIBLE BY (1) ACCESSING THE INTERNET WEBSITE SPECIFIED ON YOUR WHITE PROXY CARD; (2) CALLING THE TOLL-FREE NUMBER SPECIFIED ON YOUR WHITE PROXY CARD; OR (3) SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD SO THAT YOUR SHARES MAY BE REPRESENTED AT THE CAREMARK SPECIAL MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE CAREMARK SPECIAL MEETING BY FOLLOWING THE PROCEDURES SET FORTH IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT PROMPTLY.
| By Order of the Board of Directors, | |
| E. Mac Crawford | |
| Chairman, President and Chief Executive Officer |
[•], 2007
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| Page | Page | |||
| QUESTIONS AND ANSWERS ABOUT THE | MATERIAL FEDERAL INCOME TAX | |||
| MERGER | 1 | CONSEQUENCES OF THE MERGER | 93 | |
| SUMMARY | 6 | General | 93 | |
| The Companies | 6 | U.S. Federal Income Tax Consequences to | ||
| The Merger | 7 | Caremark Stockholders | 94 | |
| SELECTED HISTORICAL CONSOLIDATED | U.S. Federal Income Tax Consequences to | |||
| FINANCIAL DATA OF CVS | 18 | CVS Stockholders | 94 | |
| SELECTED HISTORICAL CONSOLIDATED | REGULATORY AND OTHER APPROVALS | |||
| FINANCIAL DATA OF CAREMARK | 20 | REQUIRED FOR THE MERGER | 95 | |
| SUMMARY UNAUDITED PRO FORMA | U.S. Antitrust Filing | 95 | ||
| FINANCIAL DATA | 21 | THE COMPANIES | 97 | |
| COMPARATIVE PER SHARE INFORMATION. | 22 | CVS | 97 | |
| COMPARATIVE PER SHARE MARKET PRICE | Caremark | 97 | ||
| AND DIVIDEND INFORMATION | 23 | THE MERGER AGREEMENT | 99 | |
| RISK FACTORS | 25 | Explanatory Note Regarding Summary of | ||
| Risks Related to the Merger | 25 | Merger Agreement and Representations | ||
| Risks Related to CVS, Caremark and the | and Warranties in the Merger Agreement. | 99 | ||
| Combined Company | 29 | Structure of the Merger | 99 | |
| CAUTIONARY STATEMENT REGARDING | Timing of Closing | 99 | ||
| FORWARD-LOOKING STATEMENTS | 35 | Merger Consideration | 99 | |
| THE MERGER | 37 | Exchange of Shares | 100 | |
| Structure of the Merger | 37 | Fractional Shares | 100 | |
| Merger Consideration | 37 | Caremark Stock Options | 100 | |
| Background of the Merger | 37 | Listing of CVS/Caremark Stock | 101 | |
| Rationale for the Merger | 46 | CVS Governance and Related Matters | 101 | |
| CVS Reasons for the Merger | 49 | Representations and Warranties | 101 | |
| Recommendations of the CVS Board of | Certain Covenants | 103 | ||
| Directors | 51 | Conditions to Completion of the Merger | 107 | |
| CVS Projections | 51 | Termination | 108 | |
| Opinions of Financial Advisors to the CVS | Termination Fees | 109 | ||
| Board of Directors | 52 | Other Expenses | 110 | |
| Interests of CVS Executive Officers and | Amendments; Waivers | 110 | ||
| Directors in the Merger | 69 | THE CVS SPECIAL MEETING | 111 | |
| Caremark Reasons for the Merger | 69 | Date, Time and Place | 111 | |
| Recommendations of the Caremark Board of | Purpose of the CVS Special Meeting | 111 | ||
| Directors | 73 | Board Recommendations | 111 | |
| Caremark Projections | 73 | CVS Record Date; Shares Entitled to Vote | 111 | |
| Opinions of Financial Advisors to Caremark | 74 | Quorum Requirement | 112 | |
| Interests of Caremark Executive Officers and | Stock Ownership of CVS Executive Officers | |||
| Directors in the Merger | 81 | and Directors | 112 | |
| Accounting Treatment | 89 | Votes Required to Approve CVS Proposals | 113 | |
| Board of Directors and Management of | Voting of Proxies | 113 | ||
| CVS/Caremark Following the Merger; | Revocation of Proxies | 114 | ||
| Headquarters | 89 | Solicitation of Proxies | 115 | |
| Repurchases of Caremark Common Stock | 90 | Householding | 115 | |
| Federal Securities Laws Consequences; Stock | THE CAREMARK SPECIAL MEETING | 116 | ||
| Transfer Restriction Agreements | 90 | Date, Time and Place | 116 | |
| No Appraisal Rights | 90 | Purpose of the Caremark Special Meeting | 116 | |
| Caremark Warrants | 91 | Board Recommendations | 116 | |
| Merger-Related Litigation | 91 |
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| Caremark Record Date; Shares Entitled to | Authorized Capital Stock | 123 | ||
| Vote | 116 | CVS Common Stock | 123 | |
| Quorum Requirement | 116 | CVS Preferred Stock and Preference Stock | 124 | |
| Stock Ownership of Caremark Executive | Transfer Agent and Registrar | 125 | ||
| Officers and Directors | 117 | Stock Exchange Listing; Delisting and | ||
| Votes Required to Approve Caremark | Deregistration of Caremark Common | |||
| Proposals | 117 | Stock | 125 | |
| Voting of Proxies | 117 | COMPARISON OF STOCKHOLDER RIGHTS | 126 | |
| Revocation of Proxies | 118 | UNAUDITED PRO FORMA CONDENSED | ||
| Solicitation of Proxies | 119 | COMBINED FINANCIAL INFORMATION | 138 | |
| Householding | 119 | Notes to Unaudited Pro Forma Condensed | ||
| CVS CHARTER AMENDMENT | 120 | Combined Financial Statements | 142 | |
| Increase of Authorized Common Stock | 120 | LEGAL MATTERS | 147 | |
| Name Change | 120 | INDEPENDENT REGISTERED PUBLIC | ||
| CVS BYLAWS AMENDMENT | 121 | ACCOUNTING FIRM | 147 | |
| Corporate Governance | 121 | FUTURE STOCKHOLDER PROPOSALS | 147 | |
| Chairman of the Board | 121 | CVS | 147 | |
| Chief Executive Officer | 121 | Caremark | 147 | |
| Headquarters | 122 | WHERE YOU CAN FIND MORE | ||
| Other Changes to Bylaws | 122 | INFORMATION | 148 | |
| Amendments | 122 | PART II INFORMATION NOT REQUIRED IN | ||
| DESCRIPTION OF CVS CAPITAL STOCK | 123 | PROSPECTUS | II-1 |
| LIST OF ANNEXES | ||
| Annex A | Agreement and Plan of Merger | |
| Annex B | CVS Charter Amendment | |
| Annex C | Amended and Restated CVS Bylaws | |
| Annex D | Opinion of Evercore Group L.L.C. | |
| Annex E | Opinion of Lehman Brothers Inc. | |
| Annex F | Opinion of UBS Securities LLC | |
| Annex G | Opinion of J.P. Morgan Securities Inc. | |
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QUESTIONS AND ANSWERS ABOUT THE MERGER
| Q: | What will happen in the transaction? |
| A: | CVS and Caremark are proposing to combine the two companies in a merger of equals transaction. In the merger, a wholly owned subsidiary of CVS that was formed for the purpose of the merger will be merged with and into Caremark, and Caremark will survive the merger as a wholly owned subsidiary of CVS. The combined company will be named CVS/Caremark Corporation. Caremark stockholders will have their shares of Caremark common stock converted into newly issued shares of common stock of CVS/Caremark Corporation, and CVS stockholders will retain their existing shares of CVS common stock and CVS Series One ESOP Convertible Preference Stock, which is referred to as CVS ESOP preference stock. CVS and Caremark expect that, upon completion of the merger, approximately 45.5% of the outstanding common stock of the combined company on a fully diluted basis will be held by former Caremark stockholders, and approximately 54.5% of the outstanding common stock of the combined company on a fully diluted basis will be held by former CVS stockholders. |
| In the merger, CVS’ Amended and Restated Certificate of Incorporation, which is referred to as the CVS charter, will be amended to increase the number of authorized shares of CVS common stock from 1 billion to 3.2 billion and to change CVS’ name to CVS/Caremark Corporation. These changes are described under the section entitled “CVS Charter Amendment” beginning on page 120. | |
| Q: | What will I receive in the merger? |
| A: | CVS Stockholders. Each share of CVS common stock and CVS ESOP preference stock held by CVS stockholders immediately before the merger will continue to represent one share of CVS/Caremark common stock and one share of ESOP preference stock of the combined company, as applicable, after the effective time of the merger. In other words, CVS stockholders will receive no consideration in the merger. |
| Caremark Stockholders. For each share of Caremark common stock held, Caremark stockholders will have the right to receive 1.670 shares of CVS/Caremark common stock. At the effective time of the merger, each share of Caremark common stock will be cancelled and converted automatically into the right to receive 1.670 shares of CVS/Caremark common stock. Caremark stockholders will receive cash for any fractional shares of CVS/Caremark common stock that they would otherwise receive in the merger. The amount of cash for fractional shares will be calculated by multiplying the fraction of a share of CVS/Caremark common stock to which the Caremark stockholder would be entitled to receive in the merger by the closing sale price of a share of CVS/Caremark common stock on the first trading day immediately following the effective time of the merger. | |
| Q: | When and where are the CVS and Caremark special meetings? |
| A: | CVS Special Meeting. A special meeting of CVS stockholders, which is referred to as the CVS special meeting, will be held on [•], 2007 at [•] a.m., Eastern Time, at CVS’ corporate headquarters, One CVS Drive, Woonsocket, Rhode Island 02895, to consider and vote on proposals related to the merger. |
| Caremark Special Meeting. A special meeting of Caremark stockholders, which is referred to as the Caremark special meeting, will be held on [•], 2007 at [•] a.m., Central Time, at Caremark’s corporate headquarters, at 211 Commerce Street, Suite 800, Nashville, Tennessee 37201 to consider and vote on proposals related to the merger. | |
| Q: | What stockholder votes are required? |
| A: | CVS stockholders are being asked to approve two separate proposals that are necessary to complete the merger. The completion of the merger requires: |
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| The CVS board of directors recommends that CVS stockholders vote “FOR” the amendments of the CVS charter to increase the number of authorized shares of CVS common stock and to rename the combined company CVS/Caremark Corporation and “FOR” the issuance of CVS/Caremark common stock in connection with the merger. | |
| Caremark stockholders are being asked to adopt the merger agreement and approve the merger, which requires the approval of holders of a majority of the outstanding shares of Caremark common stock entitled to vote at the Caremark special meeting. | |
| The Caremark board of directors recommends that Caremark stockholders vote “FOR” the adoption of the merger agreement and approval of the merger. | |
| Q: | Why is my vote important? |
| A: | In order to complete the merger, Caremark stockholders must adopt the merger agreement and approve the merger, and CVS stockholders must approve the issuance of CVS/Caremark common stock to Caremark stockholders in the merger and the amendments to the CVS charter to increase the number of authorized shares of CVS common stock and to rename the combined company CVS/Caremark Corporation. |
| If you are a CVS stockholder and you abstain from voting or do not vote (either in person or by proxy), or fail to direct your broker how to vote, it will have the same effect as a vote “AGAINST” the proposal to approve the amendments to the CVS charter. If you abstain or do not vote (either in person or by proxy), or fail to direct your broker how to vote, it will have no effect in determining whether the issuance of shares of CVS/Caremark common stock to Caremark stockholders in the merger will be approved, but will not be considered to be a “vote cast” for purposes of this proposal, making it more difficult to satisfy the 50% “vote cast” quorum requirement for the proposal. | |
| If you are a Caremark stockholder and you abstain from voting or do not vote (either in person or by proxy), or fail to direct your broker how to vote, it will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement and to approve the merger. | |
| Q: | Are the issuance of CVS/Caremark common stock in the merger and the CVS charter amendments each conditioned upon each other? |
| A: | Yes. The proposal to amend the CVS charter and the proposal to issue shares of CVS/Caremark common stock to Caremark stockholders in the merger are each conditioned upon the approval of the other and the approval of each such proposal is a condition to completion of the merger. Neither the issuance of CVS/Caremark common stock in connection with the merger nor the amendments of the CVS charter will take place unless both of these proposals are approved by the CVS stockholders and the merger is completed. Therefore, the completion of the merger cannot proceed without the approval of both proposals. |
| Q: | What do I do if I want to change my vote? |
| A: | You can change your vote at any time before your proxy is voted at your stockholders’ meeting. You can do this in one of four ways: |
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| If you choose either of the first two methods, you must send your notice of revocation or your new proxy to your company’s Corporate Secretary at the address under “The Companies” beginning on page 97 no later than the beginning of the applicable special meeting. If you are a CVS stockholder, you can find further details on how to revoke your proxy in “The CVS Special Meeting—Revocation of Proxies” beginning on page 114. If you are a Caremark stockholder, you can find further details on how to revoke your proxy in “The Caremark Special Meeting—Revocation of Proxies” beginning on page 118. | |
| Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? |
| A: | No. Your broker is not permitted to decide how your shares should be voted. Your broker will only vote your shares on a proposal if you provide your broker with voting instructions on that proposal. You should instruct your broker to vote your shares by following the directions that your broker provides you. Please check the voting information form used by your broker to see if it offers telephone or Internet voting. |
| A broker non-vote occurs when a beneficial owner fails to provide voting instructions to his or her broker as to how to vote the shares held by the broker in street name and the broker does not have discretionary authority to vote without instructions. Brokers do not have discretionary authority to vote on any of the Caremark proposals or CVS proposals. By signing your proxy card and returning it to your broker without specific instructions as to any proposal, your shares represented by that proxy will be voted in favor of that proposal. Any shares you beneficially own not identified as represented by that proxy will be considered broker non- votes. See “The CVS Special Meeting” beginning on page 111 and “The Caremark Special Meeting” beginning on page 116. | |
| Q: | What if I fail to instruct my broker with respect to those items that are necessary to consummate the merger? |
| A: | If you are a CVS stockholder: |
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| If you are a Caremark stockholder, a broker non-vote will be counted towards a quorum at the Caremark special meeting, but will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement and approve the merger. | |
| For additional information, see “The CVS Special Meeting—Votes Required to Approve CVS Proposals” beginning on page 113 if you are a CVS stockholder, and “The Caremark Special Meeting—Votes Required to Approve Caremark Proposals” beginning on page 117 if you are a Caremark stockholder. | |
| Q: | What do I do now? |
| A: | Carefully read and consider the information contained in and incorporated by reference into this document, including its annexes. |
| In order for your shares to be represented at your stockholders’ meeting: | |
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| Q: | Should I send in my stock certificates now? |
| A: | No. Caremark stockholders should not send in their stock certificates at this time. If the merger proceeds, CVS’ exchange agent will send former Caremark stockholders a letter of transmittal explaining what they must do to exchange their Caremark stock certificates or transfer uncertificated shares for the merger consideration payable to them. |
| CVS stockholders will retain their current stock certificates after the merger and should not send in their stock certificates. | |
| Q: | Can I dissent and require appraisal of my shares? |
| A: | No. Under Delaware law, CVS and Caremark stockholders have no right to an appraisal of the value of their shares in connection with the merger. |
| Q: | Are there risks involved in undertaking the merger? |
| A: | Yes. In evaluating the merger, CVS and Caremark stockholders should car |