FTC Clears Express Scripts, Medco Merger

The Federal Trade Commission (FTC) cleared Express Scripts's acquisition of Medco Health Solutions, eight months after the companies agreed on a merger to create the largest pharmacy benefit manager in the United States. The FTC voted 3-1 in favor of the deal.

The companies announced that shareholders had already approved the deal, which was valued at approximately $29 billion. Each Medco share will be converted to $28.80 in cash plus 0.81 shares of the new Express Scripts.

"Our merger is exactly what the country needs now," Express Scripts chief executive officer George Paz said in a statement. "It represents the next chapter of our mission to lower costs, drive out waste in healthcare and improve patient health. We remain focused on formulary management, channel management and closing gaps in care, which will allow us to further improve the health of people with chronic and complex medical conditions.

"Our clients are challenged to provide robust health benefits to American families," Mr. Paz added. "We have an unprecedented opportunity to help them by making the use of medicine safer, more affordable and more accessible."

Since last July, when Express Scripts and Medco agreed to combine their operations, the FTC had received numerous complaints that the merger would create a dominant company and increase health costs. Still, in a statement, the FTC said that after investigating the deal, it "revealed a competitive market for PBM services characterized by numerous, vigorous competitors who are expanding and winning business from traditional market leaders."

"The acquisition of Medco by Express Scripts will likely not change these dynamics: the merging parties are not particularly close competitors, the market today is not conducive to coordinated interaction, and there is little risk of the merged company exercising monopsony power," the FTC added in a statement. "Under these circumstances, we lack a reason to believe that a violation of Section 7 of the Clayton Act has occurred or is likely to occur by means of Express Scripts' acquisition of Medco."

The news release from the FTC is available at http://www.ftc.gov/opa/2012/04/medco.shtm

The Express Scripts news release is available at http://phx.corporate-ir.net/phoenix.zhtml?c=69641&p=irol-newsArticle&ID=...

-Tim Casey

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