Wall Street stocks slide before holiday weekend
The pair of reports from the Commerce Department was welcome news for the economy. Coupled with a final push of takeover activity in the past few weeks, it showed resolute consumer and corporate confidence, even with questions about how much the economy is slowing.
The Federal Reserve is attempting to orchestrate a soft landing for the economy, reining it in while not interrupting corporate growth. Wall Street is trying to peg the Fed’s next move after it left rates unchanged for the past four meetings.
Extremely light volume ahead of the Christmas holiday left the market prone to swings, however. Traders expect a light week after the Christmas holiday on Monday, when markets are closed.
“Looking at the tape, you’re going to see stocks just wallow around because of lack of interest,” said John O’Donoghue, co-head of equities for Cowen & Co. “It is before Christmas, and it will be a very light day in the marketplace where most of the participants are going to be out early, and next week will be light as well.”
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NASHVILLE (AP) ? Shareholders who claim that Caremark Rx Inc. insiders are looking out for themselves instead of general stock owners by pursuing a merger deal with CVS Corp. lost a bid Friday to get a judge to order the company to consider a hostile buyout bid by rival Express Scripts Inc.
U.S. District Court Judge Aleta Trauger rejected a motion filed late Thursday in a lawsuit that challenges the CVS deal, saying that Nashville-based Caremark had indicated it intends to consider the Express Scripts offer.
“It is reasonable to suppose that this review will be taking place after the New Year,” the judge wrote. “Certainly the plaintiff has failed to establish anything contrary to that reasonable assumption.”
Paul Warner, an Houston-based attorney for the plaintiffs in the lawsuit, said the plaintiffs would ask Trauger early next week to reconsider the motion.
Woonsocket, R.I.-based CVS, the nation’s largest operator of drugstores, said on Nov. 1 that it planned to acquire Caremark for about $21.2 billion in stock.
Maryland Heights, Mo.-based Express Scripts launched its $26 billion bid for Caremark Monday. Caremark and Express Scripts are the No. 2 and No. 3 largest pharmacy benefits managers in the country.
The CVS offer is for stock in the company, and the Express Scripts offer includes a cash option and premium for shareholders.
Caremark and CVS announced Thursday that their deal has passed the antitrust scrutiny of the U.S. Federal Trade Commission and could be completed by the first quarter of 2007.
The lawsuit filed last month by the Iron Workers of Western Pennsylvania Pension Plan contends the CVS agreement would “provide certain Caremark insiders and directors with preferential treatment.”
It points in particular to a “golden parachute” for Caremark President and CEO Edwin “Mac” Crawford that totals $48 million in stock, severance payments and consulting fees. Other executives would keep their positions as well.