Medco Makes Deal for PolyMedica

Medco Health Solutions (MHS Quote) said Tuesday that it will acquire PolyMedica (PLMD Quote), a Wakefield, Mass., company that offers diabetes-care services and supplies, for $1.5 billion.

Medco, a provider of pharmacy benefit management services, is paying $53 a share for PolyMedica. That's a 17% premium to the stock's last closing price.

The acquisition should close later this year and add slightly to Medco's 2008 earnings. Medco, Franklin Lakes, N.J., currently manages more than $6.5 billion in drug spending for its 2.8 million patients being treated for diabetes. The PolyMedica acquisition will bring in 1 million new members.

The companies began working together in 2006. Medco handles more than 50,000 prescriptions a week for PolyMedica's patients. Earlier this year, PolyMedica began providing Medicare Part B administration services and supplies to some Medco clients.

Shares of PolyMedica were up 14% to $51.65 in premarket trading. Medco closed Monday at $86.11.