ST. LOUIS (CN) – Health insurance giant Cigna announced Tuesday that it is buying Missouri-based pharmacy benefits manager Express Scripts for $67 billion, a deal that could give Cigna more control over drug prices.
The agreement reached by the boards of both companies amounts to $48.75 in cash and 0.24 shares of stock in the combined company for each Express Scripts share.
The deal is valued at about $67 billion and includes Cigna paying $52 billion and assuming $15 billion in Express Scripts debt.
The merger, which the companies hope will be completed by the end of the year, would give Cigna shareholders an estimated 64 percent ownership of the combined company and Express Scripts shareholders will own 36 percent.
The companies said the combined entity, which will keep Cigna’s name, will save $600 million due to administrative efficiencies: the new company can cut costs as it better coordinates pharmacy and medical claims. It could also increase leverage in price negotiations with drug makers. Analysts say it will eventually provide Cigna an opportunity to attract more clients by having an in-house pharmacy benefits manager.
Express Scripts is the largest public company based in St. Louis, managing the prescription drug benefits for more than 83 million Americans. The Express Scripts unit will remain based in St. Louis County but the combined company’s headquarters will be in Bloomfield, Conn., where Cigna is based.
Cigna President and CEO David M. Cordani said in a statement that the merger “brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers.”
“Together, we will create an expanded portfolio of health services, delivering greater consumer choice, closer alignment between the customer and health care provider, and more personalized value. This combination will create significant benefits to society and differentiated shareholder value,” he said.
The announcement comes a year after a federal judge blocked Cigna’s proposed $54 billion merger with Anthem over antitrust concerns.