Express Scripts and Medco Health in $29.1-bn merger pact

Express Scripts yesterday said that it would acquire Medco Health Solutions for $29.1 billion, creating the largest pharmacy benefits management (PBM) companies in the US health care industry.

Under the deal that has been unanimously approved by the boards of directors of both companies, New Jersey-based Medco shareholders will receive $71.36 per share in cash and stock, or $29.1 billion, based on the closing price of Express Scripts stock of $52.54 as of 20 July 2011.

Medco shareholders will receive $28.80 in cash and 0.81 shares for each Medco share upon closing of the transaction. The stock component is valued at $42.56 per share, which, when combined with the $28.80 in cash, brings the total value per share to $71.36, representing a premium of 28 per cent over Medco's closing share price on 20 July 2011.

Express Scripts said that it has to date identified estimated synergies of $1 billion once fully integrated, which represents approximately 1 per cent of the combined company's costs.

Medco Health is a leading PBM, with the nation's largest mail order pharmacy operations. It has pioneered the world's most advanced pharmacy and its clinical research and innovations are part of Medco making medicine smarter for more than 65 million clients.

PBM is a third party administrator of prescription drug programs. More than 210 million Americans receive drug benefits administered by PBMs. A PBM is allowed to fill drug prescriptions by mail order as part of a corporate health insurance plan. Fortune 500 employers, and public purchasers provide prescription drug benefits to the vast majority of American workers and retirees.