Cigna $67 Billion Acquisition of Express Scripts

Morgan Stanley & Co. LLC is acting as sole financial advisor and provided a fairness opinion to the Cigna Board of Directors, Wachtell, Lipton, Rosen & Katz is serving as legal counsel and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as regulatory counsel to Cigna. Centerview Partners LLC and Lazard Frères & Co. LLC are acting as financial advisors, Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel and Holland & Knight LLP is serving as regulatory counsel to Express Scripts.

Cigna Corporation (NYSE: CI) and Express Scripts Holding Company (NASDAQ: ESRX) today announced that they have entered into a definitive agreement whereby 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. The merger consideration 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.

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 David M. Cordani as President and CEO. Tim 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, Connecticut, will become the headquarters for the combined company, and Express Scripts will be headquartered in St. Louis, Missouri. At closing, the combined company will make an incremental investment of $200 million in its charitable foundation, to support the communities in which it operates, and with the continued focus on improving societal health.

Cigna intends to fund the cash portion of the transaction consideration through a combination of cash on hand, assumed Express Scripts debt and new debt issuance and Cigna has obtained fully committed debt financing from Morgan Stanley Senior Funding, Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd. 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 transaction, which is expected to be completed by December 31, 2018, is subject to the approval of Cigna and Express Scripts shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals. Until the closing, Cigna and Express Scripts will continue to operate as independent companies.

Wachtell Lipton Rosen & Katz advised Cigna with Tijana J. Dvornic and associate Jonathan H. Choi (Tax)

Paul, Weiss acted as regulatory counsel to Cigna with Rick Rule (Picture), Andrew Forman, Jonathan Kanter, Daniel Howley and Marta Kelly.

Skadden Arps Slate Meagher & Flom LLP advised Express Scripts with David Rievmanm Gavin White and Trevor Allen (Tax).

 

Involved fees earner: Charles Rule – Paul Weiss Rifkind Wharton & Garrison; Andrew Forman – Paul Weiss Rifkind Wharton & Garrison; Jonathan Kanter – Paul Weiss Rifkind Wharton & Garrison; Daniel Howley – Paul Weiss Rifkind Wharton & Garrison; Marta Kelly – Paul Weiss Rifkind Wharton & Garrison; Tijana Dvornic – Wachtell, Lipton, Rosen & Katz; Jonathan Choi – Wachtell, Lipton, Rosen & Katz; David Rievman – Skadden Arps Slate Meager & Flom; Gavin White – Skadden Arps Slate Meager & Flom; Trevor Allen – Skadden Arps Slate Meager & Flom;

Law Firms: Paul Weiss Rifkind Wharton & Garrison; Wachtell, Lipton, Rosen & Katz; Skadden Arps Slate Meager & Flom;

Clients: Express Scripts Holding Company; Cigna Corporation;

 

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Author: Ambrogio Visconti