Activist investor Carl Icahn announced late Monday he is abandoning his effort to block the $67 billion acquisition of Express Scripts Holding Co. by Cigna Corp.
In a statement on his website, Icahn said he informed the U.S. Securities and Exchange Commission of his decision, which he based on support for the deal from two institutional shareholders.
"In light of the ISS and Glass Lewis recommendations in favor of the Cigna/Express Scripts transaction and the significant stockholder overlap between the two companies, we have informed the SEC that we no longer intend to solicit proxies to vote against the transaction," Icahn said.
Proxy advisory firm Glass Lewis & Co. last week joined Institutional Shareholder Services in recommending that shareholders of the Bloomfield-based Cigna vote to approve the proposed acquisition of Express Scripts.
The vote is scheduled for Aug. 24.
Icahn, who has built a stake in Cigna, had urged shareholders to vote against the deal. He said Cigna's "likely standalone value" is $215 a share and Express Scripts should be valued at less than $60 a share. As a result, he said, "it's a travesty to complete this deal."
Shares of Cigna closed at $181.76, down less than 1 percent. Express Scripts was up about a half percent, ending the day at $84.02.
Icahn also questioned the future of pharmacy benefit managers such as Express Scripts, which work with employers to administer prescriptions. The Trump administration proposed a rule in July scaling back protections that allow rebates between drug manufacturers and insurers and pharmacy benefits managers.
Glass Lewis, according to Cigna, said the deal is "strategically and financially compelling, structured in a reasonable manner from a valuation standpoint for Cigna shareholders."
The proxy company also said the deal provides an opportunity to create a "more diverse and integrated business model in the evolving health care services industry," the health insurer said.
ISS said that for investors "with exposure to both sides of this equation, the value proposition of a combination is straightforward: the potential benefits of the combination outweigh the risks, especially given that these risks are, to some degree, unavoidable," Bloomberg News reported last week.
Leerink Research analyst Ana Gupte said in a note to investors Monday night that a review of the deal by the U.S. Department of Justice should be "substantially complete" by the end of the year.
When the two companies announced the deal last March, they said the combination will "drive greater affordability," improve links within health care and prescriptions while simplifying health care for customers.
