Activist investor Carl Icahn said shareholders in Cigna Corp. should vote against the $54 billion takeover of pharmacy-benefits firm Express Scripts Holding Co. because the health insurer is “dramatically overpaying.”
“Cigna management is offering to pay an all-time high price for a company that, as a result of secular changes, is currently standing on very dangerous ground,” the billionaire investor wrote in an open letter to shareholders on Tuesday. “It’s a travesty to complete this deal.”
According to Icahn, who says that the insurer owns 0.56 percent of Cigna’s shares, he should establish a multi-year partnership with an existing pharmacy-help manager such as Express Scripts instead of takeover and use it to buy back his existing stock. Cigna, the main provider of health insurance for companies, decided in March to pay cash and stock for Express Scripts, which helped insurers and employers manage prescription drug benefits. The aim was to collect the different parts of the healthcare system under one roof, and save money for the customers of the combined company.
“We certainly do not agree that Cigna’s only way to offer a more integrated solution is to make a $ 60 billion leverage bet on a company with many challenges like Express Scripts,” Icahn wrote. While Cigna’s stocks can reach a value of more than $ 250, “in a reasonable time”, Express Scripts argued that it now has a value of less than $ 60.
Both Cigna and Express Scripts recently said that they were continuing to support the transaction after Icahn had a big share in Cigna last week and that they were planning to disagree with the deal.
Cigna’s CEO, David Cordani, told a conference he held Thursday, saying he believes the acquisition is in the interests of shareholders. He also said he would immediately add to the earnings and give Cigna “extraordinary financial flexibility in a dynamic market”.
Express Scripts spokesman Brian Henry said in a statement on Wednesday that the link “will bring significant value to shareholders and will continue to change our health care services.”
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