Notwithstanding Chancellor Chandler’s order last month delaying a shareholder vote on the deal, CVS and Caremark successfully closed their merger last week.  The Chancellor delayed the vote until Caremark disclosed to shareholders their right to seek an appraisal and the structure of the fees paid to UBS and J.P. Morgan, which stood to gain considerably more from a consummated deal with CVS rather than a deal with Caremark’s other suitor, Express Scripts.

Edward Herlihy, Eric Roth, Craig Wasserman, and Ross Fieldston of Wachtell, Lipton, Rosen and Katz have prepared a highly insightful Memorandum offering an insider’s view of the strategic considerations that guided the Caremark board during the merger process.  The Memorandum sets forth several critical lessons boards of directors can draw from the Caremark experience, including the importance of the strategic choices that permitted CVS to improve its bid without further delaying a shareholder vote.  In light of the increased scrutiny the courts are applying to board decisions made during the auction process, the Memorandum is a must-read for directors and transaction counsel alike.