Milbank Represents Catalyst Health Solutions, Inc. In $4.4 Billion Merger Announced With SXC Health Solutions Corp.

Profession:Milbank, Tweed, Hadley & McCloy LLP
 
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SXC and Catalyst to Combine, Creating Leading Provider of Pharmacy Benefit Management Services and Healthcare Information Technology Solutions

LISLE, IL and ROCKVILLE, MD - April 18, 2012 - SXC Health Solutions Corp. (NASDAQ: SXCI, TSX: SXC) and Catalyst Health Solutions, Inc. (NASDAQ: CHSI) today announced that their Boards of Directors have unanimously approved a definitive merger agreement under which SXC and Catalyst will combine in a cash and stock transaction valued at approximately $4.4 billion. Under the terms of the agreement, Catalyst shareholders will receive $28.00 in cash and 0.6606 shares of SXC stock for each Catalyst share, which implies a purchase price of $81.02 per Catalyst share and a premium of approximately 28% based on the closing stock prices of SXC and Catalyst on April 17, 2012.

The transaction will join SXC's industry-leading pharmacy benefit management (PBM) tools, technology and expertise with Catalyst's local and collaborative client-centric PBM business model, creating a leading independent provider of PBM solutions. Together, SXC and Catalyst will provide plan sponsors, members and physicians with a comprehensive suite of customized solutions to reduce pharmacy and healthcare costs and improve patient outcomes. Upon completion of the transaction, the combined company will be an organization with $13 billion in revenue, which will be headquartered in Lisle, Illinois and will maintain a presence in Rockville, Maryland. SXC is also committed to Catalyst's industry-recognized approach to client service and intends to maintain and expand Catalyst's proven ''Centers of Excellence'' strategy.

The transaction is expected to be highly accretive to SXC's non-GAAP earnings in 2013, which excludes transaction-related amortization expected to be approximately $200 million in the first twelve months after closing. The combined company expects to achieve approximately $125 million of annual cost synergies over the first 18 to 24 months after closing through improved scale and operating leverage. The combined company expects to incur approximately $40-45 million of transition expenses to achieve these annual synergies. SXC expects annual interest expense to be approximately $70 million due to financing the transaction with $1.7 billion in debt. Upon closing, the combined company will have a strong balance sheet and attractive cash flow, giving it substantial financial flexibility to pursue continued growth initiatives while paying down debt.

''This is an extremely compelling combination that brings together SXC's industry-leading tools and technology with Catalyst's full-service PBM, best-in-class service and growing client base to create a company that is even better positioned to compete in the marketplace,'' said Mark Thierer, Chairman and Chief Executive Officer of SXC, who will continue in that role in the combined company. ''SXC and Catalyst have become two of the fastest growing independent PBMs because we share a client-centered approach to lowering healthcare costs and improving the lives of our members. By joining forces, we will be able to accelerate our shared goal of providing affordable and high quality healthcare solutions that enhance value for employer, health plan and government customers.''

Mr. Thierer continued, ''The combined company's increased scale and unique value proposition, which is centered on flexibility and customized offerings, will create significant opportunities to broaden our ability to serve the needs of our clients and members, further enhancing our growth potential and creating value for all of our shareholders.''

''Catalyst has long been a distinguished leader in our industry, and the combined company will continue to provide the same high quality, localized approach and service to customers for which Catalyst is known,'' said David T. Blair, Chairman and Chief Executive Officer of Catalyst. ''This transaction will create significant benefits for our clients through a broader range of product offerings, more effective cost management, and increased investment in innovative programs and technologies.''

Mr. Blair continued, ''Catalyst has achieved enormous success over the past 10 years and, while we are confident in our future prospects as a standalone company, the opportunities presented by this combination are more compelling. This transaction provides attractive and immediate value to Catalyst shareholders, as well as the ability...

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