NEW YORK: Cigna Corp struck a deal worth almost $53 billion to buy pharmacy benefits manager Express Scripts Holding Co, as US health insurers look outside their traditional business for new ways to cut healthcare costs.
The United States is the world’s most expensive healthcare system, and insurers are contending with rising drug costs, changes to the Affordable Care Act and possible competition from companies like Amazon.com Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co.
The deal follows the proposed $69 billion tie-up between insurer Aetna Inc and one of Express Scripts’ biggest rivals, CVS Health Corp, announced in December.
Analysts and antitrust experts said both deals could receive scrutiny from regulators, especially given recent attention by lawmakers to drug price increases.
The companies said the combination will eventually save $600 million a year due to administrative efficiencies. They can cut costs as they better coordinate pharmacy and medical claims. It could also increase their leverage in price negotiations with drugmakers.
Cigna’s offer consists of $48.75 in cash and 0.2434 shares of stock of the combined company for each Express Scripts share, amounting to $96.03 per share. That represents a premium of nearly 31 per cent to Express Scripts’ Wednesday closing price.
Cigna will also assume about $15 billion in Express Scripts’ debt, the company said. — Reuters
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