Longs rejected Walgreen's higher offer on Sept. 17, more than one month after accepting the $2.7-billion offer from CVS, saying the regulatory risk was too great. Walgreen responded later that month disagreeing with the assessment. A few days after that, Longs reported that the Federal Trade Commission was investigating whether a Walgreen acquisition would reduce competition among retail pharmacies in parts of California, Nevada and Hawaii, where Longs has most of its stores and where there is significant overlap with Walgreen stores.

In withdrawing its offer, in a letter to Longs' chairman and CEO Warren Bryant, Walgreen chairman and CEO Jeffrey A. Rein cited Longs' "repeated refusal" to negotiate the offer as well as "the substantial deterioration in the national economic outlook over the past few weeks."

"We do not believe it would be in the best interests of the shareholders, customers, or employees of either Walgreens or Longs to allow this situation to remain unresolved for an extended period of time," he wrote. "Accordingly, we have determined to accept the finality of your prior rejections."