In the largest healthcare services industry deal ever, Express Scripts has agreed to purchase Medco Health Solutions for $29.1 billion, an acquisition that will give Express Scripts nearly one-third of the pharmacy benefits market.

Buying Medco provides Express Scripts the scale it needs to become No. 1 among pharmacy benefit managers, or PBMs, companies that administer drug benefits for employers and health plans and operate extensive prescription medication mail order programs.

Now twice as big as its competitors, the combined company would have greater bargaining power with suppliers, allowing it to rival drugstore chains like CVS and Walgreens. But announcement of the merger surprised analysts Thursday and immediately raised antitrust concerns.

“Wow, I didn’t see this coming,” Art Henderson, an analyst at Jefferies & Co. in Nashville, Tenn., told Bloomberg in an email. “There are unbelievable synergies here, but I am sure this will go through a lengthy” review by U.S. regulators.

The Medco-Express Scripts deal would create a company with 1.6 billion annual prescription claims, while CVS Caremark would be second at 940 million, JMP Securities analyst Constantine Davides told Reuters.

Yet Express Scripts CEO George Paz claims this kind of consolidation is just what the country needs to rein in ballooning healthcare costs that have contributed to the U.S. budget deficit.

"This is a transaction the nation needs now," Paz said on a call with analysts. "We wouldn't be doing this if we didn't think we didn't have a very good chance of getting this through."

Express Scripts will pay $71.36 per Medco share, 28 percent more than Medco's closing price on Wednesday. Medco shareholders will receive $28.80 cash and 0.81 of an Express Scripts share for each Medco share they own.

Express Scripts shares were up 5.3 percent Thursday, to $55.34. After the deal’s announcement, Standard & Poor revised its outlook on the St. Louis-based company to negative, citing significant integration risk and a “temporarily stretched” financial risk profile, Reuters reports.

If the merger is approved, Express Scripts shareholders would own 59 percent of the combined company. Medco shareholders would own the rest.