ISS Backs Cigna-Express Scripts Deal
10 August 2018 - 11:40PM
Dow Jones News
By Cara Lombardo
Carl Icahn could have trouble finding enough allies to block
Cigna Corp.'s $54 billion deal to buy pharmacy-benefit manager
Express Scripts Holding Co.
Institutional Shareholder Services, one of two major
proxy-advisory firms, is recommending that Cigna shareholders
support the deal in a vote later this month, according to a report
ISS clients received Friday and viewed by The Wall Street
Journal.
ISS said Cigna's strategic rationale for buying Express Scripts
makes sense, given the rising costs of prescription drugs, and that
the potential benefits of the combination outweigh t he risks
raised by Mr. Icahn.
The billionaire activist investor has been urging other
shareholders to reject the deal, which he calls a "$60 billion
folly." He doesn't think Cigna should spend that much money on
Express Scripts, which as a pharmacy-benefit manager could see its
business model change under a Trump administration proposal to
lower drug prices. He is also concerned about the changing pharmacy
industry landscape, especially as Amazon.com Inc. expands its
presence.
But Cigna says Mr. Icahn doesn't understand the dynamics of
health care and appears to be betting against the deal for a
profit. And hedge fund Glenview Capital Management LLC, which has a
$1.3 billion stake split between Cigna and Express Scripts, on
Thursday publicly urged other Cigna shareholders to support the
deal. Glenview said the deal will save the companies' customers
"billions of incremental dollars annually."
Proxy-advisory firms rarely recommend that its clients, which
include institutional investors and money managers, vote against
proposed mergers. But both ISS and Glass Lewis recently recommended
that shareholders reject Rite Aid Corp.'s proposed merger with
grocer Albertsons Cos, citing concerns with the process, and the
two companies called off that deal the evening before a scheduled
shareholder vote.
Cigna in March agreed to pay what amounted to about $96.03 a
share in cash and stock for Express Scripts.
Cigna and Express Scripts are set to vote on the deal Aug. 24.
It requires signoff from a majority of shareholders of both
companies.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 10, 2018 09:25 ET (13:25 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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