Merck Lowers Priceof Medco Unit IPO

With a string of corporate accounting scandals sapping demand for new stocks, drug maker Merck & Co. (MRK) on Friday lowered the price range for the initial public offering of its Medco Health Solutions unit to $20 to $22 apiece from $22 to $24.

The new range for the 46.7 million shares was officially disclosed for the first time in an amended filing with the Securities and Exchange Commission, although sources close to the deal preempted the revision last month.

In one of the largest IPOs this year, Merck could raise more than $1 billion by spinning off Medco, which negotiates pharmaceutical contracts for health insurers and accounts for more than half of Merck’s revenue.

The latest regulatory filing gave no date for Medco’s debut, but a person familiar with the sale said it probably would come next week.

Merck, which will retain a stake of at least 80.1% in the unit, has delayed the Medco IPO twice as shares in its publicly traded competitors remain weak and the wider market writhes in the wake of the WorldCom (WCOME) scandal.

Medco, which has been accused in past lawsuits of favoring Merck drugs, has entered into a five-year contract that requires the unit to maintain market share for the parent company’s drugs or risk having rebates paid to it reduced.

New Jersey-based Medco posted revenue of $29.07 billion and net income of $256.6 million in 2001--increases of 30.6% and 18.6%, respectively, from 2000.

Merck shares closed at $48.86, up $1.58, in New York Stock Exchange trading Friday.