Cigna will acquire Express Scripts in a cash and stock transaction valued at approximately $67 billion, including Cigna’s assumption of approximately $15 billion in Express Scripts debt.
Cigna intends to fund the cash portion of the transaction through a combination of cash on hand, assumed Express Scripts debt and new debt issuance. Cigna has obtained fully committed debt financing from Morgan Stanley Senior Funding and The Bank of Tokyo-Mitsubishi UFJ. The transaction is not subject to a financing condition.
Upon completion of the transaction, Cigna is expected to have debt of approximately $41.1 billion. Cigna expects to have a debt-to-capitalization ratio of approximately 49% following the acquisition and aims to achieve a ratio in the 30’s within 18 to 24 months after the transaction closes. Cigna expects to maintain its investment grade ratings.
The merger will consist of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share. The transaction was approved by the board of directors of each company.
“Cigna’s acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers,” said David M. Cordani, president and CEO of Cigna. “This combination accelerates Cigna’s enterprise mission of improving the health, well-being and sense of security of those we serve, and in turn, expanding the breadth of services for our customers, partners, clients, health plans and communities.”
Under the terms of the definitive agreement, the transaction consideration will consist of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, or $54 billion in the aggregate. Upon closing of the transaction, Cigna shareholders will own approximately 64% of the combined company and Express Scripts shareholders will own approximately 36%. The consideration represents an approximately 31% premium to Express Scripts’ closing price of $73.42 on March 7, 2018.
Upon closing, the combined company will be led by Cordani as president and CEO. Wentworth will assume the role of president, Express Scripts. The combined company’s board will be expanded to 13 directors, including four independent members of the Express Scripts board.
The combined company will be named Cigna. Cigna’s headquarters in Bloomfield, CT will become the headquarters for the combined company, and Express Scripts will be headquartered in St. Louis.
Morgan Stanley is acting as sole financial advisor and provided a fairness opinion to the Cigna Board of Director. Wachtell, Lipton, Rosen & Katz is serving as legal counsel, and Paul, Wesiss, Rifkind, Wharton & Garrison is serving as regulatory counsel to Cigna. Centerview Partners and Lazard Frères are acting as financial advisors to Express Scripts. Skadden, Arps, Slate, Meagher & Flom is serving as legal counsel and Holland & Knight is serving as regulatory counsel to Express Scripts.
