Caremark RX Inc., which provides drug benefit services to more than 1,200 health plan sponsors and participants, agreed to buy AdvancePCS for about $5.6 billion in stock and cash to add customers.
AdvancePCS shareholders would get the equivalent of 2.15 shares of Caremark for each share they own, said Robert Mead, a spokesman for Birmingham, Ala.-based Caremark
Caremark and Irving, Texas-based AdvancePCS are among the largest pharmacy-benefits managers in the United States.
The purchase, which also includes $400 million in assumed debt, would create a new company with combined annual revenue of $23 billion, Caremark and AdvancePCS said a statement.
AdvancePCS specializes in serving managed-care customers and Caremark focuses on employers.
The agreement values AdvancePCS at $54.61 a share, 37% more than Tuesday's closing price.
After the transaction, Caremark shareholders would own about 58% of the combined company and AdvancePCS shareholders would own about 42% on a fully diluted basis.
The transaction has been unanimously approved by the boards of both companies and is subject to certain conditions, including shareholder and regulatory approvals.
Caremark shares rose 27 cents to $25.40 in New York Stock Exchange composite trading. AdvancePCS fell 3 cents to $40 in Nasdaq Stock Market trading. The deal was announced after U.S. markets closed.