August 7, 2018

Citing 'ridiculous' valuation, Icahn opposes Cigna-Express Scripts deal

PHOTO | Contributed
PHOTO | Contributed

Activist shareholder Carl Icahn is publicly opposing Cigna's proposed $67 billion acquisition of pharmacy benefits manager Express Scripts, arguing the latter is overvalued and not as secure in its industry position as some think.

Icahn and his affiliates own just under 0.6 percent of Cigna's common stock, according to the Wall Street Journal. Icahn wrote a letter to shareholders on Tuesday urging them to vote against the deal later this month.

Icahn said Amazon's expected entrance into the PBM space and government opposition to a "highly flawed [drug] rebate system" present existential challenges for Express Scripts.

"...their very existence might well come into question over the next few years," Icahn wrote.

Icahn disclosed he is long on his Cigna holdings and has taken a short position on Express Scripts' stock.

He argues that Cigna should instead pursue a multi-year partnership with Express Scripts or another PBM "while the industry resolves the structural challenges mentioned here."

Cigna did not immediately respond to a request for comment Tuesday morning.

An Express Scripts spokesman told the WSJ that second-quarter earnings, client-retention rates and prescription volume show the business is positioned for growth.

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