Walgreen Co., the largest U.S. pharmacy chain, offered to buy Longs Drug Stores Corp. for $3 billion, challenging CVS Caremark Corp.'s month-old agreement to acquire the California retailer.

The $75-a-share cash proposal is $3.50, or 4.9 percent, higher than CVS/Caremark's offer last month to buy Walnut Creek, California-based Longs, Walgreen said in a statement. Walgreen also said it was willing to pay the $115 million termination fee required to break up the CVS transaction.
The Walgreen bid, exactly one month after CVS disclosed its offer, puts pressure on CVS to increase its price or risk losing a chance to add drugstores in two of the fastest-growing U.S. states, Nevada and Arizona. Longs also has stores in California and Hawaii.
``I'm sure they're going to study the potential for a sweetened offer,'' said Matt Kaufler, a fund manager at Rochester, New York-based Clover Capital Management Inc., which oversees $2.8 billion including CVS shares.
CVS spokesman Michael DeAngelis in Woonsocket, Rhode Island, didn't immediately return messages seeking comment after regular business hours. Walgreen disclosed the bid almost four hours after the end of New York Stock Exchange composite trading.
The offer follows calls from investors urging Longs to seek a higher offer. Longs has closed above CVS's $71.50 bid price every day but three in New York trading since the agreement was disclosed.
Advisory Research Inc., Longs's biggest shareholder, said yesterday it wouldn't tender shares to CVS because the offer wasn't enough. That followed a similar statement from Pershing Square Capital Management LP, the hedge fund run by William Ackman. Ackman has said Longs's real estate is worth about as much as the CVS offer.
(Source: Bloomberg)