PolyMedica Acquisition a Purely Vertical Move For Medco Health Solutions

Includes: MHS, PLMD
by: The M & A Researcher

The potential acquisition of PolyMedica (PLMD) looks to be a purely vertical move by Medco Health Solutions (NYSE:MHS) -- one which will provide it access to the growing diabetes device/supply market. Currently, MHS has no products or services in PLMD's segments, so there are absolutely no competition issues associated with the proposed combination.

PLMD's primary operation is its "Liberty Medical" brand that has become widely recognized through its long-running national advertising campaigns. Liberty provides diabetes patients with a variety of blood glucose testing supplies and third-party pharmaceuticals. It is, in effect, a one-stop shop (direct to consumer) for individual with diabetes.

Again, MHS does not compete with PLMD in any of the company's services, so this deal will clear the HSR review process very quickly, most likely in less than 30-days from FTC notification.

Thus, the timing of this deal will almost certainly be dictated by the SEC review. PLMD has had not major run-ins with the SEC since 2003 when it had some difficulty filing its annual report and some quarterly reports. These issues were resolved quickly and have not been repeated since. In short, PLMD does not have any apparent issues which might indicate a proxy review delay in this case, especially in light of the SEC's recent habits of expediting proxies.

For the record, it will be noted that MHS' most recent major deal with ACDO did encounter a significant SEC delay due to ACDO's past issues with the regulator. That deal closed in 177 days.

However, this deal will most likely be completed in a 90- to 100-day time frame, assuming the first proxy is submitted before the end of September. If the proxy is filed quickly -- by the third week of September -- and an SEC waiver is granted, the transaction could conceivably close in mid-November 2007.

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