Express Scripts’s FTC Ruling on Medco Said Likely by Friday

Express Scripts Inc. (ESRX) will probably get a Federal Trade Commission ruling as early as March 30 on its proposed takeover of pharmacy-benefits manager Medco Health Solutions Inc. (MHS), said two people familiar with the case who declined to be identified because the review is private.

Medco reached its highest value in eight years earlier today after saying in a filing it expects the $29.1 billion deal to close as soon as next week. It isn’t clear whether the FTC, after reviewing antitrust concerns, will impose conditions in order to allow the deal to go through.

Express Scripts, based in St. Louis, agreed in July to buy Franklin Lakes, New Jersey-based Medco, saying the deal would help consumers by giving them more power to negotiate prices. The companies act as middlemen among drugmakers, pharmacies and health-plan sponsors to manage patients’ benefits.

The timeline from the companies was surprising and “reinforced confidence in the viability of the deal,” wrote Dave Shove, a BMO Capital Markets analyst in New York, in a note to clients. “This deal will close a bit earlier than we anticipated, potentially indicating less complex divestiture requirements from the FTC.”

Brian Henry, an Express Scripts spokesman, declined to comment on discussions with the FTC. Peter Kaplan, an agency spokesman, also declined to comment.

Photographer: Emile Wamsteker/Bloomberg

A sign for Medco Health Solutions Inc. stands near the company headquarters in Franklin Lakes, New Jersey. Close

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Photographer: Emile Wamsteker/Bloomberg

A sign for Medco Health Solutions Inc. stands near the company headquarters in Franklin Lakes, New Jersey.

“We’re excited to move a step further to bringing the companies together for the benefit of families and helping to do all the things we felt was the rationale for this merger all along,” Henry said in a telephone interview.

‘Remaining Conditions’

In separate regulatory filings, the two companies said that each “expects the parties may be in a position to close the transaction as early as the week of April 2, 2012, subject to satisfaction or waiver of the remaining closing conditions.”

Medco gained 3.3 percent to $71.23 at the close of trading in New York. Express Scripts climbed 1.3 percent to $53.89.

FTC Chairman Jon Leibowitz has been seeking ways to ensure the transaction wouldn’t drive up prices and reduce pharmacy services, said a person familiar with the review on March 9.

“This has been a long and thorough investigation, typical of an FTC merger inquiry and it’s unclear whether conditions will be required by the FTC,” said Robert W. Doyle, an antitrust attorney in Washington and former FTC official. “It seems in all likelihood that this transaction will ultimately get done.”

The National Community Pharmacists Association and the National Association of Chain Drug Stores said they had responded to a request from the FTC to suggest ways to revise the transaction so it wouldn’t hurt competition.

Agency officials had discussed whether the FTC should require Express Scripts to sell some specialty pharmacies to gain approval of the deal with Medco, the person said March 9.

Specialty pharmacies sell treatments for ailments such as cancer and HIV that often are injected or infused and usually require cooling or other special handling.

To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net; Sara Forden in Washington at sforden@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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