Highlighting buyside hunger for health care credits, Credit Suisse First Boston and Citibank's $350 million acquisition credit for St. Louis-based Express Scripts, backing the company's acquisition of New Jersey-based National Prescription Administrators has already blown out, and the bank meeting has not yet even been held. "It's a highly rated BB credit, leverage is low, and the bonds are trading tighter than many investment grade names," said one banker. The official launch is this week, and pricing talk is LIBOR plus 21/ 4% or better, said a banker, but the credit is already full. "Investors rang up and said, 'I want $50 million,'" said one banker, commenting on the popularity of the credit. Express and NPA are pharmacy benefit management companies.
The total price for the acquisition is $515 million, with cash on hand and a share issuance contributing the remainder. Express, which offers claims processing, formulary design, and disease management services has BB+/Ba1 ratings and is the second largest independent PBM in the U.S. based on its 47 million covered lives. Officials at the banks and company did not return calls. Express is no stranger to the debt market. It acquired competitors, ValueRx, for $445 million in 1998, and DPS, for $700 million in 1999 successfully integrating the acquired operations, according to Standard & Poor's. Growth trends in the industry are expected to continue over the intermediate term, given the aging population and the steady launch of new, innovative drugs.