Case 5.1 MERCK ACQUISITION OF MEDCO Research Paper

Case 5.1 MERCK ACQUISITION OF MEDCO - Research Paper Exampleavings, whereby a company paying higher taxes because of high income can engender other firm with accumulated losses, which after the acquisition will reduce the overall taxable income and tax liability. The other advantage of acquisition is that it allows the company to gain short term growth. The target would benefit from the predator since, in most cases, predators are well-established companies thus fasten the growth of the target (Finkelstein, 2010). Asset backing is another merit behind the acquisition. For instance, Merck would benefit from the well-established database set up by Medco and would allow Merck to achieve its objectives by using these valuable resources, which would be acquired from the target company Medco. Therefore, the ratiocination to buy Medco Containment Services by Merck, and partnership should be driven by the above factors.One of the major forces driving the acquisition of Medco Containment Services by Merck and federation is the growth in the managed health carry on, which has been contracted by the managed health care organization to Medco Containment Services. Managed health care is a new phenomenon in the health care industry and the health expert (Kolassa & Greg, 2012) predicts that by the end of the current century, at least 90% of the Americans will have the cost of their drugs included in any(prenominal) managed health care plan. Besides, at least 60% of all the outpatient medicine will be able to be purchased by the managed health care programs (Merck and Company Inc., 2002). Therefore, the planned acquisition of Medco Containment Services by Merck and Company would be timely since it would allow the predator to benefit from these lucrative business deals being enjoyed by the Medco Containment Services. As such, a substantial beneficial synergy would be created since Merck and Company is the manufacturer of drugs and Medco Containment Services manages the insurance claims, hence will encourage patients to utilize cheap generic substitute drugs