Merck Acquisition of Medco Case Study

Merck Acquisition of Medco Case Study

Keller Graduate School of Management

FIN561 Mergers and Acquisitions

Professor Gene Smith

25 January 2014

Table of Contents

Executive Summary……………………………………………………………………………3

Industry Overview……………………………………………………………………………..4

Merck’s History………………………………………………………………………...4

Medco’s History………………………………………………………………………...4

Analysis…………………………………………………………………………………………5

SWOT Analysis…………………………………………………………………………5

Announcing the Acquisition……………………………………………………………6

Motivating Factors of the Acquisition………………………………………………...7

Recommendation…………………………………………………………………………….....8

Conclusion………………………………………………………………………………………9

Works Cited…………………………………………………………………………………....10

Executive Summary

Mergers and acquisitions have become one of the number one techniques in our business society to help a company develop a competitive advantage or increase shareholder value.

This paper reviews Merck & Company’s acquisition of Medco Containment Service, Inc and provides reasons as to why this acquisition should take place. Merck & Company is one of the major healthcare leaders that produce a large variety of health solutions and Medco Containment Service, Inc is one of the leading prescription benefit management company and marketer of mail-order prescription medicine.

Merck decision to acquire Medco was to help create a competitive advantage for themselves and help expand their company overall. Merck acquired Medco for $6.6 billion. Medco has a database that contains information on millions of patients, which gives Merck the ability to learn everything they need to know to better their company. So this paper will also include my recommendation as to why this acquisition should take place.

Industry Overview

In today’s society, the Healthcare Industry is one of the largest, fastest growing industries around. Not only are they a continuous growing industry, but there are several...