CtW says Longs' anti-trust concern may be overdone

CHICAGO, Sept 29 (Reuters) - Pension fund adviser CtW Investment Group told Longs Drug Stores Corp's LDG.N board on Monday that a sale to Walgreen Co (WAG.N) should not raise major anti-trust concerns and again called for an auction rather than a straight sale to CVS Caremark Corp (CVS.N).

Longs agreed to be bought by CVS Caremark for $71.50 per share in August and Walgreen swooped in with a $75 bid a month later. Longs has rebuffed Walgreen's advances, citing potential regulatory hurdles that could delay a deal by up to a year.

CtW, which advises pension funds that own about 500,000 shares of Longs, had already urged the drugstore chain to hold a formal auction and solicit takeover offers from interested parties. Now, it is challenging Longs' argument that a deal with Walgreen would pose more regulatory risk than a deal with CVS.

In a letter to Dr. Mary S. Metz, chairman of Longs' governance and nominating committee, CtW said an analysis by law firm Doyle, Barlow and Mazard LLC concluded a deal with Walgreen "should not give rise to significant anti-trust concerns, nor require significant divestitures."

Even if the Walgreen deal led to a second request for more information, "both the length of the likely review process and the cost of such a delay to Longs shareholders appear to be significantly exaggerated," CtW said.

CtW wants Longs to disclose its own analysis or admit offers that may be superior to CVS's exist and undertake the auction process it recommended earlier this month.

A spokeswoman for Longs was not immediately available to comment.

Longs' deal with CVS has already cleared regulatory hurdles. (Reporting by Jessica Wohl; Editing by Andre Grenon)