DOW JONES NEWSWIRES
Express Scripts Inc. (ESRX) announced plans to sell at least 23
million shares as the company will electto not give any stock to
WellPoint Inc. (WLP) for the purchase of its drug-benefits
business.
Express Scripts also announced it might sell senior notes "of a
benchmark size" soon to further finance the deal.
The pharmacy-benefits manager announced in April it would pay
$4.68 billion for WellPoint's in-house operation, NextRx - $3.28
billion in cash and $1.4 billion in stock. But Express Scripts has
the option to give cash instead of equity to the nation's largest
health insurer by members.
Express Scripts is exercising that ability to give cash, raising
it the same way numerous companies have done the past month. A
plethora of firms have announced stock and/or debt sales the past
month to raise tens of billions of dollars in fresh capital amid
increased investor demand for such assets. Express Scripts' shares
have risen 50% the past two months, closing Monday at $64.45. The
stock was inactive pre-market.
The planned purchase - slated to close no sooner than September
- is seen as being able to beef up Express Scripts' negotiating
power with drug makers while narrowing the gap between it and
larger rivals Medco Health Solutions Inc. (MHS) and CVS Caremark
Corp. (CVS).
Express Scripts has nearly 250 million shares outstanding. The
stock offer would dilute current holders by slightly more than 10%
if the company sells an additional 15% of shares above the 23
million being offered if there is sufficient investor demand.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com
