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SXC Health Solutions to buy Catalyst in $4.4-billion deal

April 18, 2012|By Peter Frost

CHICAGO — SXC Health Solutions Corp. said Wednesday that it plans to buy competitor Catalyst Health Solutions Inc. for about $4.4 billion in cash and stock in an acquisition that catapults the company into the top tier of pharmacy benefits management and marks the continued consolidation of the industry.

The combined company will become the nation's second-largest independent pharmacy benefits manager in prescription volume, said SXC Chairman and Chief Executive Mark Thierer, who will retain those roles. The company will have an expected $13 billion in revenue.

"The transaction will expand our reach to larger clients," Thierer said.

Iisle, Ill.-based SXC and Rockville, Md.-based Catalyst have little overlap among clients, he said.

SXC, which administers prescription drug benefits for insurers, employers and other groups, landed the No. 1 spot on Fortune magazine's 2011 list of fastest-growing companies.

The deal is expected to close in the second half of 2012. Catalyst shareholders will receive $28 in cash and 0.6606 SXC shares for each Catalyst share held. SXC offered Catalyst $81.02 a share, a premium of about 28% to Catalyst's Tuesday close. SXC plans to finance the transaction in part with $1.7 billion in debt.

The announcement comes just weeks after pharmacy benefits manager giant Express Scripts Inc. completed its $29.1-billion merger with Medco Health Solutions Inc., creating the largest pharmacy benefits manager in the nation, filling a combined 1.4 billion prescriptions a year for employers and insurers.

Before the SXC and Catalyst deal, CVS Caremark Corp. was the No. 2 pharmacy benefits manager.

SXC shares rose $9.10, or 11%, to $89.36; Catalyst shares surged $21.69, or 34%, to $85.23.

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