Transaction valued at $1.5bn

Medco Health Solutions, has bought PolyMedica in an all-cash transaction valued $1.5bn.

Medco currently manages more than $6.5bn in drug spending related to its 2.8m patients under treatment for diabetes. The company said that it expects those customers to increase by 1m after the PolyMedica acquisition.

David B. Snow Jr., Medco chairman and chief executive officer, said: "PolyMedica has developed a deep expertise and focus in diabetes care and, through the Liberty brand, excels at attracting seniors to their high-value mail-order pharmacy. We will continue to invest strategically in capabilities supporting our Therapeutic Resource Centers® - which deliver both clinical and financial benefits to our clients and members, and differentiate Medco in the marketplace."

Patrick T. Ryan, PolyMedica chief executive officer, added: "Combining Medco's clinical care solutions with our patient-centric service model enables us to deliver a gold standard of care to patients with diabetes. After doubling our business in the past three years, this provides PolyMedica with the resources to take our service model to the next level. There is a natural cultural fit between our organizations driven by an unwavering commitment to clinical excellence and customer service."

The transaction has been unanimously approved by the boards of directors of both companies, and is subject to the approval of PolyMedica shareholders and other customary closing conditions. The transaction is expected to close later this year.

An estimated 17m Americans are currently treated for diabetes, with more than 1m patients diagnosed each year; an additional 7m are estimated as undiagnosed.