DOJ Signs Off on Healthcare Mega Deal
The Cigna merger with Express Scripts will create one of the strongest firms in the U.S. healthcare market.
Despite significant efforts by some pharmacy market participants and investors to scuttle the deal, the U.S. Department of Justice recently approved Cigna's (CI) merger with Express Scripts (ESRX) with very little pushback. This development falls in line with our expectations, as we have factored in a 100% chance of DOJ approval for the deal into our analysis for both firms. Thus, we are maintaining our $160 and $92 fair value estimates for Cigna and Express, respectively. Additionally, we are maintaining our no-moat and wide moat ratings for both the managed-care organization and pharmacy benefit manager, respectively. However, we plan to update our fair value and moat rating for Cigna after we fully incorporate our outlook for the combined entity. We expect the deal to officially close by the end of the year, with a full integration in 2019.
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Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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