Cigna deal gets antitrust nod, positive sign for CVS/Aetna
By Caroline Humer (Reuters) - Health insurer Cigna Corp's $52 billion acquisition of pharmacy benefits manager Express Scripts Holding Co has passed U.S. antitrust scrutiny, the companies said on Monday, allowing them to proceed with a combination they say will lead to lower costs by better coordinating pharmacy and medical benefits. Wall Street analysts had expected antitrust approval as the companies have little overlap in their businesses.
By Caroline Humer
(Reuters) - Health insurer Cigna Corp's
Wall Street analysts had expected antitrust approval as the companies have little overlap in their businesses. The decision bodes well for the pending U.S. antitrust review of CVS Health Corp's
The new company will marry Cigna's business of managing health plans for corporations and the government with Express Scripts'
"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger,” Cigna Chief Executive David Cordani said in a statement.
The Justice Department review of CVS’s planned purchase of Aetna may conclude this month, but will take longer because of divestitures needed to resolve competitive concerns, a source familiar with the matter told Reuters.
CVS spokeswoman Carolyn Castel said the company continues to expect to close its deal late in the third quarter or in the fourth quarter, a forecast it gave investors on Aug. 8 during a conference call.
The Justice Department in 2016 successfully blocked a pair of large health insurance mergers it believed would limit competition in the industry. Those were Aetna's plan to acquire smaller U.S. health insurer Humana Inc
Aetna and Cigna, however, were determined to seek growth through deals while responding to a changing healthcare landscape, eventually targeting mergers with the nation's largest pharmacy benefit managers (PBMs).
"We believe these two transactions add more pressure on Humana to move further down the path of vertical integration," William Blair analyst John Kreger said. "We suspect other health plans will look to follow suit."
FEELING THE PRESSURE
Antitrust experts have described the current deals as vertical combinations that present fewer issues than the failed insurer mergers. That view was bolstered after the Justice Department lost its case to stop AT&T's
"Everyone is feeling the pressure right now ... to react to disruption in the healthcare industry," said Brad Haller, a director in West Monroe Partners’ mergers & acquisitions practice.
That disruption includes Amazon.com Inc's
Amazon has also aligned itself with JPMorgan Chase & Co
Cigna's purchase of Express Scripts comes as PBMs' role in prescription drug costs has come under scrutiny.
The administration of U.S. President Donald Trump has said it is looking at how so-called industry middlemen and pharmacies such as Express Scripts and CVS impact drug costs for U.S. consumers. The administration is looking at implementing a rule that could change or eliminate the use of rebates from drugmakers to PBMs that critics say contribute to higher drug prices.
Cigna and Express Scripts said they have already obtained clearances for the deal from departments of insurance in 16 states and are working with regulators in remaining jurisdictions to obtain clearance for the merger.
"States could still conduct a public hearing ... though it is very unlikely that they do not align with the U.S. Department of Justice's decision," Leerink analyst Ana Gupte said.
The companies continue to expect the deal to close by the end of the year, subject to the satisfaction of all closing conditions.
Cigna shares closed up 1.4 percent at $197.84, while Express Scripts shares closed up 3.7 percent at $95.23. CVS and Aetna shares also rose, closing up 1.5 percent and 1 percent, respectively.
(Reporting by Caroline Humer in New York, Diane Bartz in Washington and Aakash B in Bengaluru; Writing by Bill Berkrot; Editing by Bill Rigby)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.