8:00AM U.S. MedcoHealth Solutions agreed to buy PolyMedica for $1.5.

MedcoHealth Solutions (MHS), pharmacy benefits management company announced Tuesday it will acquire diabetes treatment supplier PolyMedica Corp. (PLMD) in a $1.5 billion cash deal, or $53 per share. The purchase price represents a 17% premium to PolyMedica''s closing stock price Monday.

The transaction, which is expected to complete late this year, was unanimously approved by the boards of both companies. It is also subject to the approval of PolyMedica shareholders and other customary closing conditions. Lazard served as financial advisor to Medco, while PolyMedica received financial advice from Deutsche Bank Securities.

The combined company, Medco-PolyMedica, will serve 3.8 million diabetes patients under treatment. PolyMedica serves nearly 1 million diabetes patients through its Liberty Healthcare division. The company said that it will retain its patient engagement and service model along with its Liberty brand. MedcoHealth expects the transaction will slightly contribute to its earnings in 2008.