Express Scripts, Inc., announced an agreement to buy Medco Health Solutions, Inc., for $29.1 billion on July 21 in a deal that would create the largest pharmacy benefits manager in the United States. The buyer will pay $28 in cash and 0.81 Express Scripts shares for each Medco share, consideration worth about $71.36, which reflects a 28 percent premium to the target’s closing price on the day before the deal was announced.
The major hurdle to the deal’s completion will likely be regulatory scrutiny from the Federal Trade Commission. The merger would leave Express Scripts with only one large independent competitor, CVS Caremark Corporation, but insurers and large companies could also opt to manage drug prescriptions themselves rather than rely on Express Scripts or CVS. For example, UnitedHealthCare Group currently uses Medco but will bring its pharmacy benefits in-house next year.
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