This excerpt taken from the CVS 10-K filed Feb 27, 2007.
Even if the merger is completed, the pendency of the merger could impact or cause disruptions in CVS and the combined companys businesses, which could have an adverse effect on results of operations and financial condition.
· current and prospective clients of PharmaCare and Caremark may experience uncertainty associated with the merger, including with respect to current or future business relationships with PharmaCare, Caremark or the combined company and may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than PharmaCare, Caremark or the combined company, either before or after completion of the merger;
· Caremark and CVS employees may experience uncertainty about their future roles with the combined company, which might adversely affect CVS and the combined companys ability to retain and hire key managers and other employees;
· the attention of management of each of Caremark and CVS may be directed toward the completion of the merger and transaction-related considerations and may be diverted from the day-to-day business operations of their respective companies; and
· pharmaceutical manufacturers, retail pharmacies, pharmacy benefit management companies or other vendors or suppliers may seek to modify or terminate their business relationships with CVS, Caremark or the combined company.
Approximately one third of a PBMs customer base typically is subject to renewal each year, and therefore Caremark and CVS may face additional challenges in competing for new business and retaining or renewing business. Caremarks largest client, the Federal Employees Health Benefits Plan, is currently subject to renewal for services beginning January 1, 2008. There can be no assurance that Caremark will be able to secure renewal of this business; however, such renewal is not a condition to the completion of the merger. These disruptions and business challenges could be exacerbated by a delay in the completion of the merger or termination of the merger agreement and could have an adverse effect on the businesses, financial condition, results of operations or prospects of CVS if the merger is not completed or of the combined company if the merger is completed.