Cigna To Acquire Express Scripts in $67-Billion Deal
In a move reflecting increased consolidation in the healthcare value chain, Cigna Corporation, a Bloomfield, Connecticut-headquartered health insurance company, has agreed to acquire Express Scripts Holding, a St. Louis, Missouri-headquartered pharmacy benefit manager, for $54 billion in cash, plus Cigna’s assumption of approximately $15 billion in Express Scripts debt for a total deal value of $67 billion.
The combined company, to be named Cigna, would offer medical, behavioral, specialty pharmacy, and other health-engagement services in retail and online distribution channels. “Cigna’s acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers,” said David M. Cordani, president and chief executive officer (CEO) of Cigna, in a March 8, 2018 company statement. “Together, we will create an expanded portfolio of health services, delivering greater consumer choice, closer alignment between the customer and health care provider, and more personalized value. This combination will create significant benefits to society and differentiated shareholder value.”
Upon closing, Cigna’s headquarters in Bloomfield, Connecticut, will become the headquarters for the combined company, and Express Scripts will stay headquartered in St. Louis, Missouri. Upon closing, David Cordani, current president and chief executive officer (CEO) of Cigna, will retain that role in the combined company. Tim Wentworth, current president and CEO of Express Scripts, will continue the role of president of Express Scripts. The combined company’s board will be expanded to 13 directors, including four independent members of the Express Scripts board.
Under the agreement, the transaction consideration will consist of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, or $54 billion. Cigna is also assuming $15 billion of Express Scripts’ debt, bringing the total transaction value to approximately $67 billion. Upon completion of the transaction, Cigna is expected to have debt of approximately $41.1 billion. Additionally, upon the closing, Cigna shareholders will own approximately 64% of the combined company and Express Scripts shareholders will own approximately 36%.
The transaction, which is expected to be completed by December 31, 2018, is subject to the approval of Cigna and Express Scripts shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals. Until the closing, Cigna and Express Scripts will continue to operate as independent companies.
The deal is another example of consolidation between health insurance companies and pharmacy benefit managers, which function as intermediaries between insurers and healthcare organizations, including pharmacies and pharmaceutical companies. In December 2017, CVS Health, a retail pharmacy and healthcare company that also operates CVS Caremark, a pharmacy benefit manager, agreed to acquire Atena, a health insurer, for $69 billion plus debt for a total deal value of $77 billion. That deal is expected to close in the second half of 2018.