Thursday, 13 December, 2018

Justice Department OKs Cigna's $52 billion acquisition of Express Scripts

Office workstation top view of business people working around M&A keyboard calculator phablet and money on wooden table- merger and acquisition concept Justice Department OKs Cigna's $52 billion acquisition of Express Scripts
Melissa Porter | 20 September, 2018, 19:57

Health insurer Cigna Corp's $52 billion acquisition of pharmacy benefits manager Express Scripts Holding Co has passed USA 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. 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 companies say their merger would drive higher quality care and affordability by offering insurance and pharmacy services under one roof. "The Justice Division overview of CVS's deliberate snatch of Aetna is wrapping up and might per chance per chance moreover produce this month, but will take longer due to the divestitures compulsory to resolve aggressive issues", a offer familiar with the matter immediate Reuters.

Insurers, pharmacy-benefits managers and others in the health care supply chain have been making deals to streamline expenses and gain scale in an industry threatened by rising costs for medical services and new competition from the technology sector. When the deal closes, which is expected to happen by the end of 2018, it will end the days of a standalone PBM. But Icahn abandoned his efforts to derail the merger after two independent advisory firms recommended shareholders approve it. Cigna and Express Scripts' investors approved the deal in late August. "The value that we deliver together will help put our society on a far more sustainable path - one that helps health care professionals close gaps in care and supports our customers along their health journey".

In its ruling, the DOJ stated that the Cigna-Express merger is "unlikely to result in harm to competition or consumer".

Ana Gupte, an analyst at Leerink Partners, said approval of the Express Scripts deal is a positive sign for CVS and Aetna. Antitrust consultants accept described those affords as vertical mixtures that repeat fewer components than the failed insurer mergers.

The Justice Department said it cleared the deal after a six-month investigation. A federal judge blocked that deal in February 2017. "The other major insurers, UnitedHealth Group and Anthem, have also moved away from using outside benefit managers, posing major threats to CVS and Express Scripts", Abelson continues. 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 shares surged 4% in Monday afternoon trade, and Cigna shares rose almost 2%, compared with a 0.5% slump in the S&P 500 and a 0.3% decline in the Dow Jones Industrial Average. The agency had asked for more information from the companies back in April.