The $67 billion Cigna-Express Scripts merger just passed a key hurdle

Cigna CEO David Cordani

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Cigna CEO David Cordani
source
Reuters

  • Cigna and Express Scripts shareholders have voted to approve the companies’ $67 billion merger.
  • The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans.
  • The deal was in jeopardy for a week after billionaire Carl Icahn came out against the deal, saying it “may well rival the worst acquisitions in corporate history.” He ultimately reversed his course.
  • The deal now awaits the scrutiny of the Department of Justice.

Cigna and Express Scripts shareholders have voted in favor of the companies’ $67 billion merger.

Cigna, one of the US largest health insurers, announced the deal in March, offering $48.75 a share in cash for Express Scripts in a move aimed to cut soaring healthcare costs. The $54 billion price tag was a 31% premium to Express Scripts’ stock price at the time and includes about $15 billion worth of Express Scripts’ debt.

The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans. Express Scripts, one of three massive pharmacy benefit managers in the industry and the only standalone one. Should the deal go through, it would end the days of a standalone PBM.

Read more:The lines around healthcare are being redrawn – and all eyes are on pharmacy giant Walgreens to make the next move

Earlier in August, the affirmative vote didn’t seem so certain.

Billionaire Carl Icahn took a stake in Cigna and wrote in a letter to shareholders that the deal “may well rival the worst acquisitions in corporate history.”

But a week later, after proxy advisory companies Glass Lewis & Co and Institutional Shareholder Services said they’d support the deal alongside Glenview Capital Management, Icahn reversed his course.

“The crossover was too big and given what the advisory firms said we realized there was no way we could win. Sometimes you have to be flexible. There’s no point in fighting just to fight. We won three proxy fights in a row which is really hard to do, so you lose one. It’s the way of life,” Icahn told CNBC.

While the vote puts the deal one step closer to being finalized, it needs to still pass the scrutiny of the Department of Justice. In April, the DOJ asked for an extension to gather more information from Cigna and Express Scripts. The 30-day waiting period needed for the deal to close will not begin until all the information has been obtained, and that process can take a while. A similar healthcare merger between pharmacy CVS Health and insurer Aetna has yet to close as well.