Changes in Business

9 Months Ended

Sep. 30, 2011

Changes in Business [Abstract]

Changes in business

Note 3 — Changes in business

          On July 20, 2011, we entered into a definitive merger agreement (the “Merger Agreement”) with Medco Health Solutions, Inc. (“Medco”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Medco shareholders will receive total consideration of $23.2 billion composed of $58.83 per share in cash and stock (valued based on the closing price of our stock on September 30, 2011), including $28.80 in cash and 0.81 shares for each Medco share owned. Upon closing of the transactions under the Merger Agreement (“the Transaction”), our shareholders are expected to own approximately 60% of the combined company and Medco shareholders are expected to own approximately 40%. The merger will combine the expertise of two complementary pharmacy benefit managers to accelerate efforts to lower the cost of prescription drugs and improve the quality of care. We anticipate the Transaction will close in the first half of 2012. The Transaction is subject to regulatory clearance and Express Scripts’ and Medco’s shareholder approvals and other customary closing conditions. The Transaction will be accounted for under the authoritative guidance for business combinations.

          Consummation of the Transaction is subject to the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and other customary conditions, including (i) approval of the Merger Agreement by Medco’s stockholders and Express Scripts’ stockholders, (ii) the approval for listing on the Nasdaq Stock Market of the common stock of a new parent company for Express Scripts and Medco (“Parent”), (iii) the absence of any order prohibiting or restraining the merger, (iv) the effectiveness under the Securities Act of 1933 of a registration statement covering the shares of Parent common stock, (v) the receipt of certain regulatory consents, (vi) subject to certain exceptions, the accuracy of Medco’s and Express Scripts’ representations and warranties in the Merger Agreement, (vii) performance by Medco and Express Scripts of their respective obligations in the Merger Agreement, (viii) the absence of certain governmental appeals, and (ix) the delivery of customary opinions from counsel to Medco and Express Scripts to the effect that the Transaction will qualify as a tax-free exchange for federal income tax purposes.

     On September 2, 2011, Express Scripts and Medco each received a request for additional information (a “second request”) from the U.S. Federal Trade Commission (the “FTC”) in connection with the FTC’s review of the merger. A second request was anticipated by the parties to the mergers at the time of signing of the Merger Agreement. Issuance of the second request extends the waiting period under the HSR Act until 30 days after both parties have substantially complied with the requests, unless the waiting period is terminated sooner by the FTC. The companies have been cooperating with the FTC staff since shortly after the announcement of the merger and intend to continue to work cooperatively with the FTC staff in the review of the merger. Express Scripts intends to respond to the second request as promptly as practicable. While we cannot specify how long it will take to comply with the second request, we continue to anticipate the transactions contemplated by the Merger Agreement will close in the first half of 2012.