IRVING, Texas (AP) – Caremark Rx Inc. is buying rival AdvancePCS Inc. for about $5.6 billion in a deal that will combine two of the nation’s largest pharmacy benefit management companies.

The combined company under the deal announced late Tuesday would have projected annual revenue of $23 billion and handle about 600 million prescription claims a year.

Mac Crawford, chairman and chief executive of Birmingham, Ala.-based Caremark Rx, said the companies would mesh well, with relatively little market overlap.

“Advance PCS has built a strong base of managed care customers, while Caremark Rx has focused on the employer marketplace,” he said.

Pharmacy benefit managers handle prescription mail orders, claims and processing for millions of Americans.

The companies compete chiefly against Medco Health Solutions Inc., the nation’s largest pharmacy benefit manager, and Express Scripts Inc.

The deal is subject to shareholder and regulatory approval.

Advance PCS chairman and chief executive David Halbert said the combined companies “will possess a stronger infrastructure to help our clients navigate the challenges posed by both the aging population and the rapid innovations in health-care technologies.”

AdvancePCS handles retail and mail order prescriptions for about 45 percent of Americans with a prescription drug benefit. It manages more than 550 million prescription orders annually.

Caremark Rx provides drug benefit services to more than 1,200 health plan sponsors. Its customers include corporate health plans, managed care organizations, insurance companies, unions and government agencies.

In late morning trading Wednesday, AdvancePCS climbed $7.18 to $47.18 on the Nasdaq. Caremark RX fell $2.55 to $22.85 on the New York Stock Exchange.

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On the Net:

http://www.AdvancePCS.com

http://www.caremark.com

AP-ES-09-03-03 1333EDT