Shareholders approve Express Scripts-Cigna merger
The merger between Express Scripts and Cigna won approval from shareholders of both companies on Friday.
The vote was overwhelmingly in favor of combining Express Scripts, the St. Louis-based pharmacy benefit management company, and the Connecticut-based health service corporation.
Cigna made its $67 billion cash and stock offer in March. Following shareholder approval, the merger agreement will be reviewed by the Department of Justice, and barring any anti-trust complications, could be approved by the end of this year.
Express Script CEO and President Tim Wentworth said the company will keep its name and strong commitment to its hometown.
“I will have a very critical senior management team here, as well as all the work we do for our 80 million patients will continue to be headquartered out of St. Louis,” he said.
Thomas Greaney, a professor at University of California-Hastings Law School, and an expert on health care law, predicts that the Express Scripts-Cigna merger, as well as the CVS-Aetna merger currently under review at the Department of Justice, will be approved.
“These vertical consolidations in the health care sector of different parts of the supply chain do not cause anti-trust concerns,” he said.
Greaney, who is also a professor emeritus of Saint Louis University School of Law, did have a note of caution. He said when the Cigna-Express Scripts and CVS-Aetna mergers are completed, they, along with UnitedHealth Group's Optum, will control more than 70 percent of the pharmacy benefit market and 80 percent of the insurance market.
“We will have to see,” Greaney said, “if they will be competitive or be like an oligopoly acting in concert to set prices.”
Express Scripts was founded in St. Louis in 1986 as a result of a joint venture between a retail chain of more than 79 pharmacies called Medicare Glaser Inc. and Sanus Corp. Health Systems. Today, it is the nation’s largest pharmacy benefit manager, with revenues topping $100 billion annually.
Cigna is a worldwide health services organization based in suburban Bloomfield, Connecticut. Its insurance subsidiaries are major providers of medical, dental, disability, life and accident insurance.
David M. Cordani is Cigna’s president and CEO. He will lead the combined company, while Tim Wentworth will remain in the role of president at Express Scripts but not CEO. The combined company’s board will be expanded to 13 directors, including four independent members of the Express Scripts board.
Wentworth said Cigna takes an active role in the communities where it is located.
“If you look at Cigna’s history, if you look at where they have made other acquisitions, their footprint is larger in every one of those cities than when they made the acquisition," he said. "They have a fundamental view that you buy great assets and then let them do more to add to the overall enterprise.”
Unrelated to the merger, Express Scripts announced in July that it would be adding 100 jobs in St. Louis for its recently acquired division, eviCore.
Wentworth was very optimistic on the day of the shareholder vote about the company’s future growth after the merger. He said Express Scripts will continue to be a major employer in St. Louis and will maintain its role as an active community supporter and corporate citizen through its foundation.
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