SXC Health Solutions Corp. plans to buy fellow pharmacy benefits manger Catalyst Health Solutions Inc. in a deal the companies valued at $4.4 billion, less than a month after competitor Express Scripts Inc. closed a $29.1 billion acquisition.
SXC Health said Wednesday it will pay $28 in cash and a portion of its stock valued at $53.02 per share for each share of Catalyst. That equals a purchase price of $81.02 per share, a premium of about 28 percent over Catalyst's Tuesday closing price of $63.54.
Catalyst shares have already appreciated 22 percent since closing 2011 at $52 per share, and they shot up 34 percent, or $21.46, to $85.20 Wednesday in pre-market trading. SXC's stock climbed 14.6 percent, or $11.74, to $92.
It is not clear whether the $4.4 billion value the companies place on the deal includes the assumption of debt. Messages left with the companies were not immediately returned.
Shareholders from both companies still need to approve the deal. If they do, SXC shareholders would own about 65 percent of the combined company and Catalyst shareholders would own about 35 percent. It will be headquartered in Lisle, Ill., which is where SXC is based. Catalyst is based in Rockville, Md., and the combined company plans to keep a presence there.
Pharmacy benefits managers, or PBMs, run prescription drug plans for employers, government agencies and other clients, using their large purchasing power to negotiate lower drug prices. They make money by reducing costs for health plan sponsors and members.
SXC also provides health care information technology services to health care benefits management companies.
The companies expect the deal, which still needs antitrust approval from U.S. regulators, to close in the second half of this year. SXC has secured financing from J.P. Morgan Chase Bank, N.A. for the cash portion of the deal.
SXC expects the deal to start helping its adjusted earnings in 2013, but it also expects annual interest expense of around $70 million due to $1.7 billion in debt financing needed for the deal.
Express Scripts completed the purchase of Medco Health Solutions Inc. on April 2, making it the largest pharmacy benefits manager in the country by far.