ESRX-MHS to Merge Next Quarter - Analyst Blog
14 March 2012 - 8:15PM
Zacks
Investors will have to wait a little longer to see
Express Scripts Inc. (ESRX) and Medco
Health Solutions, Inc. (MHS) complete their merger, as the
two companies recently agreed to extend their merger-closing date.
According to the Hart-Scott-Rodino Act, the waiting period for the
merger expired on March 12, 2012. However, the companies have
decided to work with the US Federal Trade Commission (FTC) and plan
to close the merger by early second quarter 2012.
We note that in July 2011, Express Scripts had agreed to acquire
Medco for $29.1 billion ($71.36 per share) in cash and stock. At
the time of announcing the deal, Express Scripts said that Medco
shareholders will receive $28.80 in cash and 0.81 shares of Express
Scripts for each share of Medco that they own.
Following the closure of the acquisition, Express Scripts’
shareholders will own approximately 59% of the merged entity, with
Medco’s shareholders holding the remaining.
We note the acquisition of Medco Health is expected to help
lower the cost of prescription drugs and improve the quality of
healthcare, thereby attracting more patients.
In a span of few years, this will be the third major acquisition
for Express Scripts.
In July 2008, Express Scripts acquired the Pharmacy Services
Division of Medical Services Company. Medical Services Company is a
leader in providing pharmacy benefit management services to
clients, providing workers compensation benefits. Further, in
December 2009, Express Scripts acquired NextRx, WellPoint
Inc.’s (WLP) PBM segment. The deal significantly expanded
Express Scripts PBM business.
However, last year Express Scripts and WellPoint voiced concerns
about a contractual dispute. WellPoint said that it differs from
Express Scripts on the contractual interpretation of certain terms
in the agreement and certain operational matters associated with
Express Scripts' performance.
While WellPoint is threatening to drag Express Scripts to court
regarding the matter, Express Scripts is hopeful of a mutual
settlement.
Currently, we have a Neutral recommendation on Express Scripts.
The stock carries a Zacks #3 Rank (Hold rating) in the
short-run.
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
MEDCO HLTH SOL (MHS): Free Stock Analysis Report
WELLPOINT INC (WLP): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Medco (NYSE:MHS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Medco (NYSE:MHS)
Historical Stock Chart
From Jul 2023 to Jul 2024