Pharmacy Benefit Manager Express Scripts to Buy Medco for Staggering $29.1 Billion

Pharmacy benefit management company Express Scripts ESRX has agreed to buy competitor Medco Health Solutions MHS for $29.1 billion, making it one of the largest M&A deals of the year. Under the agreement, Medco stockholders will receive $71.36 per share, or more than a 20% premium to Wednesday's closing price of $55.78. Investors will receive $28.80 in cash and 0.81 shares for each share they own. If approved by regulators, the deal would be second in size only to AT&T's T proposed acquisition of T-Mobile USA for $39 billion earlier this year. "The merger with Medco will accelerate our efforts to create greater efficiencies in the healthcare system and better protect American families from the rising costs of prescription medicine while improving health outcomes.” said George Paz, Chairman and CEO of Express Scripts. The two combined companies expect to deliver value by generating greater cost savings for patients and plans, creating more efficiency, and closing gaps in care, among other objectives. David Snow, Chairman and CEO of Medco, commented: “We continue to have great confidence in moving forward as a stand-alone business, however, the incremental benefits of combining with Express Scripts are both logical and compelling.” The deal is also indicative of the healthcare industry's scramble to remain profitable in light of a changing regulatory environment in the U.S. Analysts expect more consolidation and greater flexibility by health care providers and managers.