Justice Department Clears Cigna's Acquisition of Express Scripts

20 September, 2018, 19:57 | Author: Kara Nash
  • Cigna sign

The companies expect to close the deal by the end of 2018.

Assistant Attorney General Makan Delrahim who leads the Justice Department's antitrust division said the regulators' six-month investigation into the deal concluded it is "unlikely to result in harm to competition or consumers".

Aetna and Cigna, however, were determined to seek growth through deals while responding to a changing healthcare landscape, eventually targeting mergers with the nation's largest pharmacy benefit managers (PBMs). Last December, Aetna, another giant insurer, announced its plan to join forces with CVS Health, the drugstore chain that is the main independent rival to Express Scripts, in a $69 billion deal.

The new company will marry Cigna's business of managing health plans for corporations and the government with Express Scripts' role handling pharmacy benefits for those same customers. Completion of the transaction remains subject to certain state regulatory approvals and filings required in connection with the transaction, including clearances from certain departments of insurance, and the satisfaction of all closing conditions, the companies said.

The U.S. Department of Justice has given an earlier-than-expected all-clear to Cigna Corp.'s quest to acquire pharmacy benefits manager Express Scripts, a move that presages further consolidation among those left standing alone in the health-care sector.

Cigna's stock was trading upward at $199 by mid-morning Tuesday, and Express Scripts' was trading at $95.59.


"Quality health care and competitive pricing for health care services and pharmaceutical drugs is critical to US consumers", Makan Delrahim, an assistant attorney general, said in a statement.

But many observers, including hospital groups, employers and other health plans, have criticized the deal and that of CVS Health and insurer Aetna's, which has not yet been cleared by the Justice Department, as profit-driven schemes unlikely to benefit consumers.

"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company", Cigna Chief Executive Officer David Cordani said in a statement.

Brian Tanquilut, an analyst with Jefferies, said DOJ's decision not to intervene is not surprising "given the lack of overlap between Cigna's business versus Express Scripts". Antitrust consultants accept described those affords as vertical mixtures that repeat fewer components than the failed insurer mergers.

Icahn said Cigna's "likely standalone value" is $215 a share and Express Scripts should be valued at less than $60 a share. Express Scripts countersued the insurer, which represents about a fifth of its revenue. Cigna closed up 1.40% yesterday; Express Scripts rose 3.71%.

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