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Department of Justice close to approving CVS Health/Aetna, Cigna/Express Scripts merger deals

The two transactions could see formal antitrust approval within a few weeks, a report said.

Beth Jones Sanborn, Managing Editor

The Department of Justice is close to approving two landmark mergers, the CVS Health/Aetna merger and Cigna's proposed acquisition of Express Scripts, according to multiple reports.

Citing "people familiar with the matter," a Wall Street Journal report (subscription required) suggested that the two transactions could see formal antitrust approval in a few weeks and that regulators are going to require CVS Health to offload assets related to its Medicare drug coverage to quiet anti-competition concerns.

The same sources said the Cigna/Express Scripts deal could go off without any asset sales.

Express Scripts commented through a spokesperson saying they continue to cooperate with the DOJ and expect the deal to go through by the end of the year, according to a CNBC article.

Roughly a week ago, shareholders stamped their approval on the proposed merger with Express Scripts, a leading pharmacy services company. Roughly 90 percent of the votes cast were favorable toward the merger agreement, Cigna said.

"Our combined company will enhance Cigna's differentiated service-based model, fueled by actionable insights and analytics, to drive innovation and meaningful growth in a highly dynamic market environment. As a result, we will build more effective partnerships, further improve health outcomes and deliver a superior customer experience," said David MCordani, president and CEO of Cigna said at the time.

The terms of the deal include $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, or $54 billion in the aggregate. When the deal is done, Cigna shareholders will own approximately 64 percent of the combined company and Express Scripts shareholders will own approximately 36 percent.

In February the DOJ had requested more information on CVS Health and Aetna's proposed $69 billion merger and the companies cooperated. The deal was first announced in December of 2017 and was billed as a shake-up of the payer market, combining Aetna's expansive provider network with CVS Health's consumer access via its 9,700 pharmacy locations and 1,100 MinuteClinic walk-in clinics.

As recently as June of this year, groups spoke out against the deal though, with the American Medical Association conducting an "exhaustive analysis" of the proposal and pushing regulators to block the merger.

The AMA cited "evidence indicating the merger's likely anticompetitive effects on Medicare Part D, pharmacy benefit management services, health insurance, retail pharmacy, and specialty pharmacy."

Twitter: @BethJSanborn
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