March 12 (Bloomberg) -- Express Scripts Inc. said it won't raise its $26.1 billion bid for Caremark Rx Inc., a rival manager of drug benefits, clearing the way for the drugstore chain CVS Corp. to win a three-month takeover battle.

Shares of Express Scripts gained the most since mid-November after George Paz, the chief executive officer, said his company had made its ``best and final offer.'' Caremark's board refused to investigate that proposal, Paz said today in a statement. U.S. antitrust regulators delayed the bid last week.

The CVS offer of $24.9 billion already has antitrust clearance and would close sooner. The company that takes over Caremark, the No. 2 U.S. manager of pharmacy benefits for employers and insurance companies, will be in a stronger position to negotiate discounts from pharmaceutical companies.

``The decision to stand firm with the current offer means that Express Scripts is more likely to remain a stand-alone company,'' said Matt Perry, an analyst with Wachovia Capital Markets in New York, in a note to clients today. ``If the two offers are within approximately 5 percent of each other, Caremark shareholders are likely to approve the CVS offer.''

Shares of Express Scripts, based in Maryland Heights, Missouri, rose $3.52, or 4.6 percent, to $80.59 at 4 p.m. New York time in Nasdaq Stock Market composite trading, after jumping as much as 5.6 percent. The biggest gain before that was 5.7 percent on Nov. 13, after the company was upgraded by J.P. Morgan Securities Inc.

Caremark

Shares of Caremark, based in Nashville, Tennessee, fell $1.20, or 1.9 percent, to $60.70 in New York Stock Exchange composite trading. Caremark ranks behind Medco Health Solutions Inc. among companies that manage drug benefits, and Express Scripts ranks third. CVS, based in Woonsocket, Rhode Island, fell 62 cents, or 1.9 percent, to $31.98.

Caremark agreed to the CVS buyout in November and later rejected higher offers from Express Scripts.

``Our current offer is the best and only offer we can make at this time,'' Paz, the Express Scripts CEO, said in today's statement. Paz said the company might make a higher offer if Caremark's board agreed to negotiate.

CVS spokesman Mike DeAngelis wasn't immediately available for comment. A Caremark spokesman declined to comment.

``We cannot in good conscience offer more consideration without an opportunity to conduct confirmatory due diligence,'' Paz said, referring to the process of investigating the offer. ``There is no way around it, the best case scenario for Express Scripts and Caremark stockholders is for bidders to have equal information and then engage in a competitive bid process.''

FTC Request

The U.S. Federal Trade Commission last week issued a second request for information on whether combining Express Scripts and Caremark, which compete to manage drug benefits for employers and insurers, would raise drug prices.

CVS received antitrust clearance on Dec. 20 for its plan to buy Caremark, and both companies have said they expect to close the deal this month. CVS shareholders are to vote on the deal March 15 and Caremark holders, March 16.

CVS, the second-biggest U.S. drugstore chain behind Walgreen Co., in November agreed to exchange 1.67 of its shares for each Caremark share in an all-stock transaction. On March 8, CVS raised a special dividend payable to Caremark shareholders at the close of the deal to $7.50, from $6, effectively boosting its offer to $60.43.

Express Scripts Dec. 18 offered $29.25 in cash and 0.426 of its own shares for each Caremark share. On March 8, Express Scripts increased its offer by as much as 87 cents a share, to $61.97, by proposing to raise its bid about a half cent a share each day, or 6 percent on an annual basis, starting April 1.

Express Scripts today extended its tender offer for all outstanding Caremark shares by a month, to April 17. The company said it had been offered a total of 5.9 million Caremark shares. Caremark had about 427 million shares outstanding on Jan. 31, 2007.

To contact the reporter on this story: Lisa Rapaport in New York at Lrapaport1@bloomberg.net

Last Updated: March 12, 2007 16:27 EDT