Health insurer Cigna Corp's (CI.N) $52 billion acquisition of pharmacy benefits manager Express Scripts Holding Co has passed US antitrust scrutiny, the companies said on Monday, allowing them to proceed with a combination they say will lead to lower costs by better coordinating pharmacy and medical benefits.
The companies continue to expect the deal to close by the end of the year, subject to the satisfaction of all closing conditions.
In the news announcement Monday, Express Scripts CEO Tim Wentworth reiterated that combination of the companies would "be able to do even more to reduce healthcare costs, expand choice, and improve patient outcomes" and "transform healthcare".
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"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. Federal antitrust enforcers have not successfully blocked a vertical merger in decades, and a federal judge in June cleared the vertical deal between Time Warner and AT&T after the Justice Department challenged it, which boded well for Cigna and Express Scripts' chances. CVS also manages drug-benefits plans for employers and insurers, a business that could help steer Aetna's customers into CVS drugstores when they fill prescriptions.
Cigna is a health insurance provider. As a result, he said, "it's a travesty to complete this deal".
Icahn said Cigna's "likely standalone value" is $215 a share and Express Scripts should be valued at less than $60 a share.
The Department of Justice's antitrust review of CVS Health's $69 billion bid for Aetna is taking longer due to divestitures needed to ensure competition is not impeded, a source familiar with the matter told Reuters.
Antitrust experts have described the current deals as vertical combinations that present fewer issues than the failed insurer mergers. Cigna and Anthem are still battling over a $1.85 billion break-up fee. Express Scripts countersued the insurer, which represents about a fifth of its revenue.
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). Its board of directors also saw the need for Cigna to rein in pharmacy spending, one of its main drivers of healthcare costs, according to SEC documents from May.
Express Scripts stock jumped 3.7 percent after regulators cleared the way for Cigna to buy it. Cigna rose 1.4 percent.