Medco Health Solutions Inc (MHS.N) is seen as the lead bidder for Aetna Inc's pharmacy benefit manager in an auction that has drawn scant interest, sources familiar with the situation said on Wednesday.
Aetna (AET.N) hired Bank of America Corp (BAC.N) and Credit Suisse Group AG (CSGN.VX) to run the sale of the business, sources previously told Reuters.
Pharmacy benefit managers (PBM) administers prescription drug benefits for employers and health plans and operate large mail-order pharmacies.
The auction has sparked interest from Medco and CVS Caremark Corp (CVS.N), sources said on Wednesday. The auction may ultimately conclude without a deal if Aetna fails to get the right price, sources said.
Medco was viewed as the lead bidder due to the strategic fit of the unit and its ability to pay for the deal without the need for significant financing, sources said.
Medco could not be immediately reached for comment.
Analysts have said pharmacy chain Walgreen Co (WAG.N) also could be a potential bidder. Walgreen could not be immediately reached for comment.
Last month, Medco said it was willing to spend billions of dollars on acquisitions and had unprecedented financial flexibility to make deals.
Honestly, there is nothing out there that's on my radar screen that would be too big, Medco Chief Financial Officer Richard Rubino said last month.
Rubino said deals could include buying other company's PBM units or add-ons of a clinical nature that would grow its specialty pharmaceuticals or other businesses.
The beautiful thing in all of this is we've got flexibility like we've never had before, Rubino said.
Aetna declined to comment on the auction, citing company policy not to comment on rumors or speculation.
Aetna said it remained committed to its integrated value proposition and clinical integration of pharmacy benefits remains a core element of Aetna's strategy, but it would be willing to explore options that could add value to its shareholders and customers.
Sales of PBM units have been robust this year.
Cigna Corp (CI.N) has also said it was evaluating the future of its PBM business.
Rival PBM Express Scripts Inc (ESRX.O) recently agreed to buy health insurer WellPoint Inc's (WLP.N) pharmacy benefit unit for $4.68 billion. (Reporting by Jessica Hall; editing by Andre Grenon) (For more M&A news and our DealZone blog, go to here)