UPDATE 2-CVS, Longs shareholder differ on antitrust issues

(Adds comments from CtW, background, byline)

By Jessica Wohl

CHICAGO, Oct 3 (Reuters) - CVS Caremark Corp (CVS.N) said on Friday a review of a possible sale of Longs Drug Stores Corp LDG.N to Walgreen Co (WAG.N) that found few antitrust concerns was flawed, inaccurate, erroneous and incomplete.

The group that presented the review, pension fund adviser CtW Investment Group, responded that the way CVS analyzes potential store overlaps and other issues is not how the U.S. Federal Trade Commission is likely to review Walgreen's bid.

Longs agreed to be bought by CVS 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.

CVS said it "took strong exception" with a letter CtW sent to the Longs board on Monday that analyzed possible antitrust risk of a potential sale of Longs to Walgreen.

CVS said the analysis was filled with issues such as an erroneous calculation of store overlaps.

"In summary, any suggestion that the regulatory risks involved in a CVS/Longs transaction and those involved in a Walgreens/Longs transaction are comparable is nonsense," CVS said.

CVS once again stood by its deal with Longs. The offer from CVS has passed regulatory hurdles and is fully financed.

CtW disputed many of the issues brought up by CVS.

"This just reeks of a desperate attempt to rescue a sweetheart deal," CtW's Richard Clayton said.

He said CVS keeps pointing out possible overlap between Longs and Walgreen using the U.S. Office of Management and Budget's definition of a metropolitan area, but that the FTC would not likely review the deal that way.

CtW pointed to the commission's review of the most recent major drugstore merger, Rite Aid Corp's (RAD.N) 2007 purchase of Brooks and Eckerd stores from Jean Coutu (PJCa.TO), to show that the commission did not seek divestitures of overlapping stores in any cities or metropolitan areas, but instead required Rite Aid to sell stores in small towns.

In the letter sent on Monday, 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."

Last week, Longs announced that the FTC was investigating Walgreen's bid to see whether the combination of the two companies would substantially lessen competition among retail pharmacies in parts of California, Nevada and Hawaii.

CVS also said a claim in the letter that it planned to enter the Hawaii market "is patently false."