<p>In Friday, August 19th, 2008 a shareholder has filed the first a proposed class action lawsuit in California Superior Court in Contra Costa County on behalf of the public shareholders of Longs Drug Stores Corporation (NYSE: LDG) against Longs Drug Stores Corporation and certain members of Longs’ Board of Directors arising out of their breaches of fiduciary duty in connection with the acquisition of Long Drugs Corp by CYV Ceremark Corp. The second lawsuit was filed on August, 22, 2008.</p> <p style= text-align: justify; >Background of the lawsuits is that on August 12th , 2008, Longs Drugs Corp. agreed to be acquired by CVS Caremark for approximately $2.9 billion via tender offer.</p>
<p style= text-align: justify; >The complaint alleges that the proposed Acquisition Proposal is an unlawful plan through which CVS Caremark would acquire all shares of Longs without providing material disclosures, for inadequate consideration and under circumstances is unfair to the class. One complaint alleges that according to numerous public statements in support of the Proposed Transaction as made by CVS Caremark Chief Executive Officer Tom Ryan, Long’s real estate assets are a key component of the transaction and a substantial expected benefit to CVS Caremark. The complaint alleges that according to CEO Ryan’s public statements Long’s real estate assets are worth a conservative estimate of $1 billion, which CVS Caremark would be able to monetize to its benefit. After the Proposed Transaction was announced and CVS Caremark CEO Ryan made his remarks, several major shareholders of Longs started to question whether the true value of Longs’ real estate assets was actually far higher, so the lawsuit. The plaintiff alleges in addition that the agreement entered into between Longs, CVS Caremark Corp. and Blue MergerSub erects several barriers meant to deter competing bids and to prevent Longs shareholders from receiving full value for their shares, like even if Longs Drugs Corp were to receive a superior bid for the Company, Longs Drugs Corp. would be required to pay CVS Caremark a break-up fee of $115 million, or an astounding 4.5% of the equity value of the Proposed Transaction. Furthermore the stockholders allege that the Longs Directors structured the Proposed Transaction so that CVS Caremark need not comply with the usual corporate formalities that go along with the usual third-party merger.<br /> Instead,so the complaint they added significant “deal protections” in the Proposed Transaction, the Longs Directors granted a “top-up” option to CVS Caremark that allows CVS Caremark to complete a “short form” merger even it never pays a price sufficient to obtain 90% of the Long Drugs Corp’s outstanding shares. According to one complaint the “top up” option allows CVS Caremark to pay the lowest possible price necessary to get the required 66-2/3% of the Company’s shares, but enjoy the benefits of a short form merger. The plaintiff accuses that the inclusion of this provision makes clear the parties’ intent to avoid applicable shareholder voting protections at the expense of Longs shareholders.</p>