ISS Backs Cigna-Categorical Scripts Deal, in Blow to Carl Icahn

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Carl Icahn’s

effort to seek out sufficient allies to dam


CI -1.31%

$54 billion proposed buy of pharmacy-benefit supervisor

Categorical Scripts

ESRX three.03%

Holding Co. simply obtained slightly more durable.

Institutional Shareholder Companies, considered one of two main proxy-advisory corporations, is recommending shareholders of the well being insurer and Categorical Scripts assist the deal in a vote later this month, in response to reviews ISS shoppers obtained Friday that had been seen by The Wall Road Journal.

The information despatched shares of Categorical Scripts up three.eight% to $84.90 Friday morning, as the percentages the takeover can be accomplished appeared to enhance. The inventory nonetheless trades effectively beneath the worth of about $96 a share in money and inventory Cigna in March agreed to pay for Categorical Scripts. Cigna shares had been little modified.

Whereas acknowledging Mr. Icahn’s concern that the deal brings Cigna deeper into the quickly evolving prescription-drug industry, strolling away from it “might depart the corporate uncovered to the reliable long-term menace of rising healthcare prices,” ISS mentioned.

ISS concluded the deal’s potential advantages, together with elevated scale and earnings, outweigh the considerations raised by Mr. Icahn.

The billionaire activist investor, who owns a zero.56% stake in Cigna, has been urging different shareholders to reject the deal, which he calls a “$60 billion folly.” He doesn’t assume Cigna ought to spend that a lot cash on Categorical Scripts, a pharmacy-benefit supervisor that might see its enterprise mannequin change underneath a Trump administration proposal to decrease drug costs. He’s additionally involved in regards to the altering pharmacy-industry panorama, particularly as

expands its presence.

Cigna has mentioned Mr. Icahn doesn’t perceive the dynamics of well being care and seems to be betting in opposition to the deal for a revenue. Hedge fund Glenview Capital Administration LLC, which has a $1.three billion stake break up between Cigna and Categorical Scripts, on Thursday publicly urged different Cigna shareholders to assist the deal. Glenview mentioned it is going to save the businesses’ clients “billions of incremental dollars yearly.”

Proxy-advisory corporations’ opinions maintain vital sway with shareholders. The corporations hardly ever advocate their shoppers, which embody main institutional buyers, vote in opposition to proposed mergers.

Each ISS and Glass Lewis lately advisable shareholders reject


Assist Corp.’s proposed merger with grocer Albertsons Cos. and the 2 corporations known as off the deal the night earlier than a scheduled shareholder vote.

Cigna and Categorical Scripts shareholders are set to vote on the deal Aug. 24. It requires signoff from a majority of shareholders of each corporations.

Write to Cara Lombardo at

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