Icahn To Attempt To Block Cigna-Express Scripts Deal With Recent Stake

Activist investor Carl Icahn has accrued a stake in CIGNA Corporation CI that he intends to leverage to block the Express Scripts Holding Co ESRX merger, according to a Wednesday report from the Wall Street Journal.

Express Scripts plunged 6.5 percent while Cigna popped 4.7 percent.

What Happened

With ownership of less than 5 percent of shares, Icahn is considering urging fellow shareholders to oppose the deal.

He is said to view the $54 billion transaction as too expensive, given Express Scripts trades around $75.68 and Cigna agreed in March to pay $96.03 per share. He also sees little value in combining the entities; the pair is not seen to be strong enough to compete with Amazon.com, Inc. AMZN’s expanding pharmacy operations, and proposed policies to limit manufacturer rebates could weigh on the company.

Why It’s Important

A failed Cigna-Express Scripts merger could limit the firms’ competitiveness as health services consolidate and pursue vertical integration. However, its setback could prove beneficial to rival pharmacies and pharmacy benefit managers.

It may carry particular read-through for Aetna Inc AET and CVS Health Corp CVS, which are attempting a merger of their own.

Cigna and Express Scripts shareholders will vote on the sale Aug. 24.

Related Links:

Baird Downgrades Express Scripts On Industry Instability

Why Bernstein is Skeptical Of Cigna's Move to Buy Express Scripts