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  • immerlogic immerlogic Aug 2, 2011 11:09 AM Flag

    someone got slapped!

    cmxgen, it would appear, on the surface at least, that ESRX gained a powerful bargaining advantage with the MEDCO acquisition announcement. As we all know however things are not always as simple as they first appear. For instance, if I sat on the board of Bank of America, Morgan Stanley or any of the 11 banks that have committed to loaning ESRX a total of $14billion, I would look for certain assurances. At or near the top of my list would be that ESRX secure a contract with WAG. I would not be surprised if this were a covenant of the loan agreement.

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    • As reported in the Seattle times
      August 1, 2011.

      If you sat on the board I would think others board members would look at trending growth!!
      As reported in the Seattle times
      August 1, 2011.
      Membership in Humana's stand-alone Medicare prescription drug plans was up 41 percent from a year ago at 2.4 million members. Humana credited the upswing in part to teaming with retail giant Wal-Mart Stores Inc. to offer a Medicare prescription drug plan.

      Retail is at the end of the Insurance chain, this is lesson that should be
      considered from the Above referenced article.

      • 1 Reply to robbsbeach
      • Sure, they're accountants. They look at historicals, trends, cash flow & all sorts of stuff. They also look at potentials flies in the ointment. Walgreen is the largest retail provider of rx drugs. Clearly they have a large, loyal customer base. It is far better to have them on board than not. None of these banks wants to make a large loan in the current economic environment until they minimize risk.

    • I think these two events were running separate events.

      WAG/ESRX were renegotiating retail rate contract, while MHS/ESRX were talking merger.
      ESRX did not seek MHS to help fight WAG. MHS sought ESRX because of future lost business from UNH, Calpers, FEP, etc.

      ESRX used the potential merger as a positive to put a strangle hold on WAG. No way WAG walks away.

      As far as banking goes, they have been in talks for awhile and the banks have been on board. These mergers are not risky at all. Your combining similar business to leverage purchasing power.

      WAG needs to focus on competitive future. With WMT, MHS/ESRX, and CVS, who will be 1, 2, 3, 4 in next 5 years.

      CVS has caremark to draw business towards CVS as we go to preferred/ restricted networks. WMT with humana. What does WAG have, what are there options? They no longer will have ESRX or MHS to merge with? Is it possible that ESRX/MHS one day buy WAG??

      What are your thought on MHS/ESRX impact to WAG bottom line/ top line?