Case 5.1 MERCK ACQUISITION OF MEDCO Research Paper

Case 5.1 MERCK ACQUISITION OF MEDCO - Research Paper suitavings, whereby a company paying higher taxes because of high income can acquire another firm with lay in losses, which after the eruditeness will reduce the overall taxable income and tax liability. The other advantage of acquisition is that it endures the company to achieve short term growth. The physical object would receipts from the predator since, in most cases, predators atomic number 18 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 decision to buy Medco Containment Services by Merck, and Company should be driven by the preceding(prenominal) factors.One of the major forces driving the ac quisition of Medco Containment Services by Merck and Company is the growth in the managed health care, 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 some 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 effective synergy would be created since Merck and Company is the manufacturer of drugs and Medco Containment Services m anages the insurance claims, hence will encourage patients to hire cheap generic substitute drugs