Under the terms of the merger agreement, entered into on September 2, 2003, Caremark Rx acquired 100 percent of AdvancePCS's outstanding stock. AdvancePCS stockholders received value equivalent to 2.15 shares of Caremark Rx common stock for each AdvancePCS share, were paid 90% in Caremark Rx common stock and 10% in cash. For each share of AdvancePCS common stock held, AdvancePCS stockholders received:
- shares of Caremark Rx common stock in an amount equal to the product of (1) 2.15 and 0.90, or 1.935 shares of Caremark Rx common stock; and
- an amount in cash equal to 0.10 multiplied by the product of (1) 2.15 and (2) the average of the per share closing sales prices of shares of Caremark Rx common stock as reported on the NYSE during the five consecutive trading day period ending on, and including, the fifth trading day immediately prior to the effective time of the merger. Based on this pricing period, the resulting amount of cash received for each AdvancePCS share held was $7.01.
Stockholders of Caremark prior to the merger did not have to exchange their shares nor did they see any change in their account holdings as a result of the merger's completion. Stockholders of AdvancePCS were able to identify the conversion of their shares to Caremark shares through their account holdings statements if their shares are held by a bank or broker (in "street name"). Individual questions about Caremark or AdvancePCS stockholder accounts should be addressed through the Caremark stock transfer and exchange agent, Wachovia Bank at 1-800-829-8432.
Each stockholder should review the section of the Joint Proxy Statement entitled "Material U.S. Federal Income Tax Considerations" and consult his or her own tax advisor as to the tax consequences of the merger to such stockholder under Federal, state, local or other applicable law.