Carl Icahn is getting involved in Cigna’s $67 billion merger with Express Scripts, and the pharmacy middleman's stock is plunging (ESRX, CI)
- Billionaire Carl Icahn is taking a stake in health insurer Cigna and plans to vote against its merger with Express Scripts, The Wall Street Journal reported Wednesday.
- Cigna in March said it planned to acquire Express Scripts in a $67 billion deal that ends the days of a standalone pharmacy benefit manager, a company that negotiates drug costs.
- Watch Cigna and Express Scripts trade in real time.
Carl Icahn is reportedly not a fan of Cigna’s $67 billion merger with Express Scripts.
Shares of the pharmacy benefits manager fell as much as 8% Wednesday afternoon following a Wall Street Journal report saying billionaire Carl Icahn had amassed a sizable stake in insurer Cigna. The Journal reported that his stake in Cigna is less than 5% of the company’s outstanding shares.
Shares of Cigna rose about 3.5% on the news.
Cigna, one of the US largest health insurers, announced the deal in March, offering $48.75 per 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 Express Scripts’ debt.
In April, the Department of Justice 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.
The deal came just months after the $69 billion healthcare mega-merger between health insurer Aetna and drugstore chain CVS Health. These so-called vertical mergers are creating new combinations that are starting to blur the lines of what constitutes a healthcare company at a time when the companies responsible for paying for healthcare expenses — like insurers — are feeling the effects of new procedures and innovative medications coming into the market with high price tags. To counter that, they’ve been consolidating, in part hoping that it will give them more of leverage.
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