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CI

Cigna

$188.10

0.24 (0.13%)

, ESRX

Express Scripts

$78.92

2.085 (2.71%)

16:37
08/07/18
08/07
16:37
08/07/18
16:37

Cigna confirms support for proposed Express Scripts merger

Cigna (CI) issued the following letter to stockholders in response to the letter released by Carl C. Icahn about the Company's proposed merger with Express Scripts Holding Company (ESRX): Dear Cigna Shareholders: Cigna strongly disagrees with Mr. Icahn, who has recently chosen to publicly object to our previously announced merger with Express Scripts. The Board recommends that Cigna shareholders vote "FOR" the combination with Express Scripts. In the nearly five months since the merger announcement on March 8, 2018, neither Mr. Icahn nor his representatives have contacted Cigna or otherwise offered their views. Moreover, Mr. Icahn has disclosed that he only owns approximately one half of one percent of Cigna's stock and has a "substantial" short position in Express Scripts. Cigna believes that the proposed combination will create tremendous value for shareholders, accelerate the transformation of healthcare and address the dynamic regulatory environment for health services. Mr. Icahn, on the other hand, has made a speculative financial bet against the transaction in the hopes that he can create a gain at the expense of Cigna and Express Scripts shareholders. Mr. Icahn's opposition is misguided and short-sighted. Moreover, the assertions in Mr. Icahn's letter are value destructive and demonstrate a clear lack of understanding of the dynamics of the healthcare industry. Mr. Icahn appears to believe that a multi-year partnership with an existing PBM provider would be preferable to the announced transaction. There are a number of issues with this view. First and foremost, it demonstrates a complete lack of understanding of Cigna's business model and how we win in the marketplace. The integrated medical, pharmacy and behavioral services model has been the cornerstone of Cigna's long-term strategy. It allows us to improve health on the front end, thereby decreasing the need for acute medical services and lowering costs. We will not be able to inoculate ourselves from changes in the dynamic marketplace by sitting on the sidelines and hoping that others figure it out - nor would we want to. In fact, with respect to pharmacy, costs have rapidly risen from approximately 10% of the total healthcare equation to almost 25% and as such present a critical and sustained opportunity for innovation and value creation for our clients and customers. Furthermore, the notion that we can negotiate a complex multi-year agreement with a third party that will allow us to deliver attractive PBM affordability to our clients and customers while the rest of the industry reformats itself is naive at best. We have first-hand knowledge as a PBM operator that these arrangements are complex and that it would be exceedingly difficult to draft a static contract that benefits Cigna in all scenarios in a changing environment. This is one of the reasons why the next logical step to meaningfully accelerate our strategy and reduce healthcare costs is to expand our pharmaceutical services by fully acquiring Express Scripts. Finally, Cigna operates in a highly regulated healthcare environment, where regulatory and competitive change is constant as demonstrated by the adoption and evolution of the ACA, the rise of the public and private exchanges, hospital systems taking on more insurance risk and employers contracting directly with hospital systems. Each of these changes brought with it a regulatory or competitive threat to the current model - whether the threat of a shrinking employer market or the threat of disintermediation of insurers. The only constant in healthcare is that unsustainable cost increases are creating disruptive changes in the environment. Cigna has sought to embrace these changes and innovate in order to find opportunities for growth in this dynamic landscape. As a result, during a period of unprecedented changes in the healthcare environment, Cigna has delivered double-digit top-line and bottom-line growth over an 8-year period, 384% cumulative total shareholder returns from December 31, 2009 through June 30, 2018 and leading U.S. total medical cost trend results (less than 3% in 2017 - representing the lowest in the industry). Our combination with Express Scripts will give Cigna the scale to more effectively address regulatory change and drive transformation in pharmaceutical pricing that works for our model - while at the same time giving us the vast capabilities of Express Scripts to deliver superior and differentiated pharmacy services to our clients and customers in a sustainable non-disruptive fashion that allow us to compete or partner with others in the market from a position of strength. The combination also allows us to make definitive moves to tackle the underlying issues that are causing the disruptive regulatory changes - the unsustainable costs increases in healthcare. As industry leaders in cost trend management, Cigna and Express Scripts have set the strategic goal to lower medical and pharmacy trend to a level at or below Consumer-Price Index by 2021.

CI

Cigna

$188.10

0.24 (0.13%)

ESRX

Express Scripts

$78.92

2.085 (2.71%)

  • 24

    Aug

  • 24

    Aug

CI Cigna
$188.10

0.24 (0.13%)

08/02/18
SBSH
08/02/18
NO CHANGE
SBSH
Vote against Express Scripts deal 'somewhat shortsighted,' says Citi
Citi analyst Ralph Giacobbe believes a vote against Cigna's (CI) proposed acquisition of Express Scripts (ESRX), which the Wall Street Journal reported that activist Carl Icahn will push for, could prove "somewhat shortsighted given the changing and evolving healthcare landscape and the integrated offering and cash flow that a combined entity would generate to compete more effectively." The analyst says that regardless of the outcome, he remains positive on Cigna shares. The company's model should continue to drive growth without Express Scripts, and potentially enhance growth with the deal, Giacobbe tells investors in a research note. He keeps a Buy rating on Cigna.
08/02/18
JPMS
08/02/18
NO CHANGE
JPMS
Overweight
Cigna holders unlikely to vote down Express Scripts deal, says JPMorgan
While Cigna (CI) shares have underperformed peers since the deal for Express Scripts (ESRX) was announced in March, shareholders are unlikely to vote down the transaction, JPMorgan analyst Gary Taylor tells investors in a research note after the Wall Street Journal reported that Carl Icahn has built a stake and will push for voting against the deal. The analyst admits the market is taking a more negative view, as Express Scripts' 16% spread to offer value widened to 25% yesterday. Taylor believes few shareholders have questioned the strategic rational of the merger. He believes, however, that some of Icahn's points could resonate with bears in the near-term. The analyst keeps an Overweight rating on Cigna.
08/03/18
RHCO
08/03/18
NO CHANGE
Target $244
RHCO
Buy
Cigna price target raised to $244 from $220 at SunTrust
SunTrust analyst David MacDonald raised his price target on Cigna (CI) to $244 and kept his Buy rating after its "strong" Q2 results showed a "sizable" earnings beat across its business lines and lower expected medical cost trends. The analyst also maintains his bullish view on the pending Express Scripts (ESRX) deal, stating that the potential benefits of the combination are underappreciated give the strong momentum of the latter heading into 2019. MacDonald contends that investors' merger related concerns are "misplaced" and also sees Cigna valuation as "compelling".
08/07/18
LEHM
08/07/18
NO CHANGE
LEHM
Overweight
Cigna shares have upside with deal or no deal, says Barclays
Barclays analyst Steve Valiquette sees upside in shares of Cigna (CI) no matter the outcome of the shareholder vote on August 24 relating to its proposed acquisition of Express Scripts (ESRX). Under a deal break scenario, Cigna should trade at a multiple relatively in-line to diversified peer Anthem (ANTM), implying a fair value of $215, Valiquette tells investors in a research note. If the deal is approved, the analyst sees Cigna shares falling to $180 in the near term. However, his sum-of-the-parts analysis yields a current fair value of $213 per share. As such, the analyst sees upside potential on Cigna in both merger vote scenarios. Valiquette keeps an Overweight rating on the shares.
ESRX Express Scripts
$78.92

2.085 (2.71%)

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