Medco Health Solutions: A Short-Term Arbitrage, Long-Term Opportunity

 Medco Health Solutions is one of the nation’s largest pharmacy benefit managers that covers approximately one in five Americans. Once combined with Express Scripts, the synergies between these two companies should provide a powerful combination. Over the short run, the value of Medco shares should rise to the $71 purchase price assuming the deal goes through.

On the other hand, if the deal does not go through, we believe that Medco Health Solutions represents a compelling growth opportunity in its own right. Consequently, we find it hard to see how investors seeking above-average long-term growth can go wrong. Both Medco Health Solutions and Express Scripts represent compelling opportunities to participate in the large economic opportunity of the graying of America.

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