Market Updates

Express Script Acquires WellPoint Pharmacy Unit

123jump.com Staff
13 Apr, 2009
New York City

    Express Script acquires NextRx from WellPoint, Inc for $4.6 billion for cash and stock. The deal expected to close by the end of the year will also benefit from a 10-year deal with WellPoint and tax advantages. The company will add 25 million members for pharmacy plans.

[R]12:50 PM New York - Express Script acquires NextRx from WellPoint, Inc for $4.6 billion.[/R]

Express Script announced a merger agreement to acquire pharmacy benefit business of WellPoint NextRx for $4.675 billion. The price tag includes future tax benefits of merging two companies and the merger is expected to complete in the second half of 2009.

The company plans to pay in cash and may pay up to $1.4 billion through its share.

Earlier the company had guided annual earnings per share for 2009 between $3.63 and $3.73 and merger may be slightly accretive in this year. The company through the merger will gain 25 million members.

WellPoint will benefit from generating cash from a business that is not essential to their core focus and Express Script will gain scale that will help it to lower its drug purchase costs from large pharmaceutical companies.

Pharmaceutical retailers and other mail order companies have been looking to grow through acquisitions. CVS acquired Caremark and paid a whopping $27.5 billion in 2007 and Walgreen failed to acquire Longs Drug for $3 billion in September last year. However, Walgreen has acquired six other companies since 2006.

Recently RxHub and SureScripts, two competing health networks merged to provide one nationwide network for e-prescriptions and the exchange of health information.

Lead advisor in the deal to Express Script was Citigroup Inc and Credit Suisse Group and JP Morgan acted as sub-advisors. Express Script agreed to pay a break-up fee of $50 million if the acquisition is failed to occur for the lack of financing or other related matters.

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