Merck & Co's IPO for Medco

Merck & Co has announced the initial public offering of up to 46,700,000shares of common stock of its wholly-owned subsidiary, Medco Health Solutions.

Merck will offer these shares as a selling stockholder and Goldman Sachs and JP Morgan Securities will have the option to purchase up to an additional 7,005,000 shares to cover over-allotments, if any. The IPO price per share is estimated to be between $22.00 and $24.00.

On completion of the offering, Merck will continue to own at least 80.1% of Medco's common stock. Merck subsequently intends to divest itself of the remaining equity interest in the unit in a transaction intended to be tax-free to Merck and its US shareholders. The distribution is expected to occur within 12 months of the IPO, subject to Merck's receipt of a favorable tax ruling from the Internal Revenue Service that its distribution of its shares of Medco's common stock to Merck shareholders qualifies as a tax-free distribution under the IRS code and will be tax-free to Merck and its US shareholders. The distribution will also be subject to other closing conditions.