Express Scripts to Acquire PBM Medco

July 21, 2011 ( - Express Scripts Inc. has announced that it will buy Medco Health Solutions Inc. for $29.1 billion in cash and stock.

Business Insurance reports that Express Scripts will pay $71.36 per Medco share, a 28% premium to its adjusted closing price on July 20. According to the terms of the deal, Medco shareholders will receive $28.80 in cash and 0.81 shares for each Medco share they currently own.

According to Business Insurance, this merge of two of the “Big Three” pharmacy benefit managers may meet antitrust challenges. The combined company would be the industry’s largest, with 1.6 billion in annual prescription claims; the second, CVS Caremark, holds 940 million.

The combined company’s corporate headquarters will be in St. Louis; Express Scripts CEO George Paz will serve as chairman and CEO of the organization. Express Scripts has also said that its board of directors will be expanded to include two current independent Medco board members.

“Given the attrition risk Medco faces over the next few years, in regard to the UnitedHealth contract going away in 2013, and other publicized losses, it’s a good deal for Medco and their shareholders,” JMP Securities’ Constantine Davides said, according to Business Insurance. “There will be an antitrust hurdle to clear,” he continued. “It will take a while on the regulatory front, but it’s a consolidating industry.”

Pharmacy benefit managers (PBMs) administer drug benefits for employers and health plans. 


-Sara Kelly