Express Scripts to buy Medco for $29 billion: report

The deal, which could be announced as early as Thursday, underscores a scramble by healthcare firms to reposition themselves to cope with far-reaching changes in the world's biggest market.

It would be the year's second-largest takeover after AT&T Inc's planned purchase of T-Mobile USA.

The newspaper said the deal was signed early on Thursday and Express Scripts was expected to pay $71.36 per share in cash and stock for Medco. That would be a 28 percent premium to Medco's closing price of $55.78 on Wednesday.

Buying Medco would help Express Scripts compete with rival pharmacy benefit manager CVS Caremark Corp , which has emerged as a powerful force following its own round of acquisitions.

PBMs play a central role in the U.S. healthcare system by administering prescription-drug benefits and processing claims. Their work is likely to increase as President Barack Obama's overhaul of the health system extends insurance coverage to more Americans.

An Express Scripts spokesperson declined to comment to Reuters on the report. Medco Health Solutions could not be reached for comment.

Medco suffered a major setback in May when it lost a big pharmacy benefit contract to CVS starting next year. The surprise decision on the Federal Employee Program account followed closely on Medco losing a contract with Calpers, the biggest U.S. public pension fund.

(Reporting by Ben Hirschler and Renju Jose in Bangalore; Editing by Dan Lalor)

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