Activist investor Carl Icahn has dropped his fight to block Cigna Corp.’s $54 billion acquisition of Express Scripts Holding Co. after two prominent shareholder advisory firms came out in support of the deal.
Institutional Shareholder Services Inc. and Glass Lewis & Co. last week urged Cigna’s investors to support the takeover, saying it made sense from a financial and strategic perspective. Icahn had opposed the deal, saying it would be a “travesty” if it were to proceed. He sought to block the deal in a proxy fight ahead of a shareholder vote set for Aug. 24.
“In light of the ISS and Glass Lewis recommendations in favor of the Cigna/Express Scripts transaction and the significant stockholder overlap between the companies, we have informed the SEC we no longer intend to solicit proxies to vote against the transaction,” Icahn said Monday in a statement.
Cigna, based in Bloomfield, Connecticut, agreed in March to the cash-and-stock deal for St. Louis-based Express Scripts with the goal of bringing two branches of the health care services sector under one roof, saving money for clients of the combined company. Glass Lewis called the insurer’s offer for the pharmacy benefits manager “both strategically and financially compelling, structured in a reasonable manner from a valuation standpoint for Cigna shareholders.”
ISS said it believes the transaction would be “significantly accretive” to earnings in the year following the deal’s closing. It noted Cigna’s management has said it expects to achieve earnings of $20 to $21 a share in 2021, compared with $18 a share on a standalone basis.
Cigna said in a statement Tuesday that it was fully committed to closing the deal by the end of 2018. The health insurer’s shares were up 0.2% to $182.05 at 9:39 a.m. in New York. Express Scripts gained 0.6% to $84.55.
“We continue to be confident in the deal, and we are pleased that others share our optimism about what our companies can do to advance health care,” Brian Henry, an Express Scripts spokesman, said Monday in an email.
A representative for Cigna didn’t immediately respond to a request for comment after regular business hours.
Icahn holds a 0.56% Cigna stake — disclosed in a filing last week — as well as a short position in Express Scripts. He came out against the deal, saying the insurer is “dramatically overpaying” for Express Scripts. While he acknowledged he faced an uphill battle to block the deal, the billionaire investor argued that Cigna investors should vote against it, based in part on the threat posed by Amazon.com Inc. to Express Scripts’s future.