Mega Healthcare Firm formed in St. Louis

[Arch City]

St. Louis-based Express Scripts, Inc. and Franklin Lakes, NJ-based Medco Health Solutions merged yesterday in a $29-billion deal that will have the merged firm headquartered in suburban Cool Valley, Missouri in St. Louis County.

Based on 2011 revenues, St. Louis-based Express Scripts, Inc. becomes the nation's largest healthcare firm just eclipsing McKesson (San Francisco), Cardinal Health (Columbus, Ohio), UnitedHealth Group (Minneapolis) and CVS/Caremark (Woonsocket, RI) with a combined revenue of $111-billion dollars. (#1, #2)

Already the largest company in Missouri based on revenue, the merger more than doubles its size. It is the largest company - in terms of revenue - in Missouri state history. It also becomes the fourth largest public firm headquartered in the Midwest behind Berkshire Hathaway (Omaha), GM and Ford (Detroit) and the fifth largest public or private firm in the Midwest behind Berkshire Hathaway, GM, Ford and Cargill (Minneapolis)( #3).

Express Scripts, Medco complete $29 billion merger
St. Louis Business Journal by E.B. Solomont , Reporter
Date: Monday, April 2, 2012, 8:59am CDT - Last Modified: Monday, April 2, 2012, 9:19am CDT



Express Scripts North St. Louis County headquarters

Express Scripts closed on its $29.1 billion acquisition of Medco Health Solutions today, the company announced shortly after 7 a.m. The deal creates the largest pharmacy benefits manager in the U.S., with about $100 billion in annual revenue.

First announced in July 2011, the acquisition was approved by shareholders in December but was held up by antitrust concerns.

The Federal Trade Commission gave its blessing Monday morning, voting 3 to 1 in favor of the deal and ending an eight-month inquiry. “As a result of the evidence collected during an intensive eight-month investigation, we conclude that the proposed transaction is not likely to substantially lessen competition,” the commission’s majority said in a statement in which they acknowledged that theirs “was not an easy decision.”

Following consummation of the merger, shares of Franklin Lakes, N.J.-based Medco's stock were converted into $28.80 in cash and 0.81 shares of the new Express Scripts.

The company has said it expects $1 billion in “synergies,” or savings once it is fully integrated. Both companies are now wholly-owned subsidiaries of St. Louis-based Express Scripts Holding Co., trading on Nasdaq under the symbol ESRX.

Other Readings:
Wall Street Journal
Bloomberg

[Arch City]

Here are a few images of Express Scripts' campus. Express Scripts has a lot of infrastructure in metro St. Louis - particularly in north St. Louis County.

Express Scripts' main corporate campus sits on the northernmost edge of the University of Missouri-St. Louis' campus. Express Scripts has a partnership with UMSL.

The main corporate campus is accessible by MetroLink via UMSL. Lambert-St. Louis International Airport is about three miles or so from the main corporate campus off Interstate 70.


Metrolink traversing corporate campus
photo, flickr.com


Aerial of main campus.


Pharmacy Technology & Innovation Center


HQs III Building


Aerial of campus along both sides of Interstate 70.

[Arch City]

In case you haven't been following news pertaining to this merger...............

Excerpts from St. Louis Post-Dispatch articles:

1. Express Scripts Deal Creates National Giant

"The FTC approved Express Scripts’ blockbuster acquisition of rival Medco Health Solutions Inc. in a $29.1 billion deal. The regulatory approval creates a corporate titan called Express Scripts Holding Co. with a projected annual revenue of $116 billion — an entity bigger than household names such as IBM and Verizon."

2. Express Scripts, A Big Pill To Get Down

"For Express Scripts, Medco Health Solutions will be a very big pill to swallow. Could it bring on a little indigestion?

With $70 billion in revenue last year, Medco far outsells Express Scripts Inc.'s $46 billion. Medco employs 23,200 people versus 13,100 at Express Scripts.

Yet the smaller pharmacy benefit management company is buying the big one, in a deal that closed on Monday."

An excerpt from the New York Times:

3. F.T.C. Approves Merger of 2 of the Biggest Pharmacy Benefit Managers

"The acquisition of Medco by Express Scripts, based in St. Louis, creates what is now the industry’s largest player, with $116 billion in 2011 revenue. CVS Caremark, itself the product of a merger between a large drugstore chain and a benefit manager, is now the second-largest competitor with $107 billion in revenues."

Two excerpts from Bloomberg

4. Goldman gives strong rating to new Express Scripts

"A Goldman Sachs analyst said Tuesday that Express Scripts Holding Co. is poised for strong profit growth for the rest of this decade after the pharmacy benefits manager completed its acquisition of former competitor Medco Health Solutions.

THE OPINION: Analyst Robert Jones said the $29.1 billion deal makes Express Scripts a "dominant" company in health care. He said the St. Louis company's per-share profit should grow more than 20 percent per year through 2015 and should rise by at least 10 percent per year through 2020."

5. Express Scripts Judge Sets Hearing on Injunction Request

"The judge overseeing a private antitrust lawsuit seeking to block Express Scripts Inc. (ESRX)’s acquisition of Medco Health Solutions Inc. (MHS) set a hearing for April 10 on a request for an injunction to undo the deal.

U.S. District Judge Cathy Bissoon in Pittsburgh today scheduled the hearing after a telephone conference with lawyers for the company and the trade groups suing to prevent the deal, which was approved yesterday by the Federal Trade Commission. She ordered Express Scripts to respond by April 6."

[Centropolis]

Does this mean any more jobs here?

[Arch City]

Originally Posted by Centropolis

Does this mean any more jobs here?

In the short term, my understanding is no. The only exception is executive jobs.

My best guess is that over the long term there will be jobs - outside of executive jobs - added locally. Local jobs were added after their other acquistions.

Also, I don't know if they have met their quota requirement already, but they are on the hook to create jobs in Missouri because they received tax incentives from the State of Missouri and St. Louis County committing themselves to add jobs.

On another note, North Park, where they have two buildings, is not completely built out. Then on top of that their UMSL campus has limited room to grow. I wouldn't be surprised if we start to hear chatter about speculative development at North Park.

Sooner or later, unless something catastrophic happens, Express Scripts will need to expand.

Below is an aerial of North Park.

[Arch City]

Just an FYI,

Express Scripts (2005, 2009, 2011)

In 2005 the pharmacy benefit management company Express Scripts set off a bidding war when it announced it was considering various states for its new headquarters with an expected 1,200 jobs. But the company's main goal may have been to maximize retention subsidies for staying in the St. Louis area. The company turned down what were reported to be higher offers from other states after Missouri legislators, reportedly with an eye on the Express Scripts competition, created new corporate tax breaks through the Quality Jobs Act.

Express Scripts decided to locate its new headquarters on the campus of the University of Missouri at St. Louis as part of a subsidy package worth about $20 million – $12.5 million from the state, and more than $8 million from St. Louis County in property tax abatements and sales tax exemptions on construction materials. When Express Scripts decided in 2009 to build a new drug distribution center, it created another bidding contest. The Missouri Development Finance Board promptly awarded the project $3 million in Build Missouri bonds. That plus another $4 million in financial assistance apparently persuaded the company to put the facility in north St. Louis County. In November 2010 the company asked the county for another $63 million in bond financing.

In December 2010 Express Scripts was awarded a ten-year, $6.2 million property tax abatement, $3 million in Quality Jobs tax credits and $1 million in BUILD subsidies for an expansion of its headquarters complex.

(Source)