3-8-18 8:32 AM EST | Email Article

Health insurer giant CIGNA Corporation (NYSE: CI) reached an agreement to buy Express Scripts Holding Company (NASDAQ: ESRX) in a deal which values the pharmacy benefits manager's stock at $96.03 per share, or $67 billion for the entire company.

What Happened

Cigna reached an agreement to acquire Express Scripts in a cash and stock transaction. As part of the agreement, Express Scripts' shareholders will receive $48.75 per share in cash and 0.2434 shares of the stock of the combined company for each Express Scripts share they hold. The compelling strategic benefits of the deal is three-fold, the companies said in a joint press release:

  1. The combined entity will be able to offer a full suite of medical, behavioral, specialty pharmacy and other health engagement services across retail and online distribution channels.
  2. The combined entity will combine their respective expertise to provide a more coordinated approach to an individual's health care journey.
  3. The combined entity will combine their insights and predictive analytics to deliver industry-leading innovation and medical technology.

Why It's Important

The mega-merger is seen by at least one analyst as a preemptive move to counter Amazon.com, Inc. (NASDAQ: AMZN)'s push into the health care space.

"It is possible that the threat of an Amazon entry into the healthcare and possibly the drug supply chain landscape, with the latest news of the Amazon/Berkshire Hathaway/JPMorgan employer coalition has spurred Cigna and Express Scripts to tie the knot," Leerink Partners analyst Ana Gupte told CNBC.

What's Next

The acquisition has been approved by the board of directors of both companies. Once completed, Cigna shareholders will own approximately 64 percent of the combined company. Cigna's CEO David Cordani will serve as CEO of the combined entity.

Expres Scripts was trading up more than 17 percent at #86 in the pre-market session. Cigan was down about 5.2 percent at $184.

Related Links:

Predicted Gross Margin Pressure, EPS Erosion Turn Bernstein Bearish On Express Scripts

RBC Likes Express Scripts After 'Sharp' Pullback

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