updated 9/14/2008 2:14:44 PM ET 2008-09-14T18:14:44

Walgreen Co. made an offer late Friday to buy Longs Drug Stores Corp. for $2.8 billion, hoping to unseat a rival offer from CVS Caremark Corp. that Longs had already accepted.

Deerfield, Ill.-based Walgreen said it would pay $75 a share in cash to buy Walnut Creek, Calif.-based Longs, besting CVS's price of $71.50 per share, also in cash, which was equivalent to about $2.7 billion. Either deal would also include the assumption of about $200 million in debt.

Longs shares rose 4 percent to $74.50 in after-hours trading.

Walgreen CEO Jeffrey Rein said in a letter to Longs' board of directors that the company would prefer to negotiate with Longs directly but also was prepared to take the offer directly to the company's shareholders.

Rein also noted in the letter, which Walgreen disclosed in a press release late Friday, that Walgreen had expressed an interest in acquiring Longs earlier for $70 a share but never received due diligence materials from the company.

Longs has faced dissent from some shareholders over the value of the CVS deal.

Earlier Friday, one of the largest shareholders in Longs said it opposed the deal with CVS and had identified four other potential buyers for the drug store chain.

Pershing Square Capital Management, which owns about 3 million shares — a 9.2 percent stake — of Longs, has previously said that CVS's bid didn't adequately value Longs' real estate holdings.

Two other major shareholders, Advisory Research and CtW Investment Group, have also publicly questioned the CVS deal.

Speaking in a television interview Friday before the Walgreen announcement, CVS Chief Executive Tom Ryan said the company does not intend to raise its bid.

"We think we are paying a full and fair price," he said. "We're not moving. We're done."

A spokesman for CVS didn't immediately return a call late Friday seeking comment, and a spokesman for Longs wasn't available for comment.

Walgreen, the nation's largest drugstore chain by sales, has 6,356 stores nationwide. The company has said its goal is to have 7,000 stores by 2010.

Longs has more than 500 stores, mostly in California, but also in Hawaii, Nevada and Arizona. The company also owns Rx America, a prescription benefits management program with more than 8 million members.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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