- Cigna inched forward its $67 billion deal to acquire Express Scripts on Wednesday, filing paperwork with the Securities and Exchange Commission outlining its argument for regulatory approval and setting parameters for which company will be accountable if the pact falls apart.
- If Express Scripts or Cigna terminates the merger, it may owe the other company a $1.6 billion termination fee. If the deal fails to clear regulatory hurdles, Cigna may be required to pay a reverse termination fee of $2.1 billion, according to the filing. Leerink analysts called the various termination terms “reasonable” in a research note.
- The merger, which is working through the regulatory process and subject to approval from both Cigna and Express Scripts shareholders, is expected to close in the second half of this year, according to the filing.
Interestingly, Leerink’s note speculates that Express Scripts may also have been in discussions with Walgreens Boot Alliance and Amazon, “though these other discussions did not lead to any deal proposals.” Express Scripts recently announced it would with work with Walgreens to expand group purchasing efforts around specialty pharmaceuticals.
Cigna and Express Scripts are pursuing their deal with an eye toward Amazon and its interest in the healthcare industry. They are also certainly watching the pending merger between CVS Health and Aetna, which has the potential to cause waves throughout the sector.
Both companies filed a pre-merger notification with the Federal Trade Commission and the U.S. Department of Justice Antitrust Division on March 22. The DOJ issued a request for more information on the merger to both companies on April 23. Leerink notes that it is possible the DOJ review process could drag the merger into next year.
Under the terms of the deal, Express Scripts will continue to operate under its name and will remain based in St. Louis. The major pharmacy benefit manager will also have four of its board members placed on the combined company’s 13-person board.
Express Scripts CEO Tim Wentworth will serve as president of the Express Scripts division and will report to the CEO of the combined company. Wentworth said in a statement that when the deal closes, "the two companies will, together, be uniquely positioned to do even more to improve healthcare, expand choice and lower costs."
Cigna’s effort to merge with Express Scripts comes a year after the payer's attempted merger with Anthem fell apart following a DOJ challenge in 2016. Anthem had been a big customer for Express Scripts, but said last year it would not renew the contract and was planning to launch a new pharmacy benefit management company.