Cigna Corp. shopped around for new business combinations and Express Scripts Holding Co. said it considered different business directions, but ultimately the two companies found no takers or choices other than each other, they said Wednesday in a regulatory filing.
The companies announced in March a $67 billion purchase by Bloomfield-based Cigna. The deal could help control health care costs in an effort to keep pace with consolidation in the insurance and pharmacy benefits management industries.
The filing with the U.S. Securities and Exchange Commission also detailed how the two companies and their representatives kept an eye on a deal between Aetna Inc. and CVS Health Corp. that was announced last December. CVS is buying Aetna for $69 billion.
Cigna last year terminated a merger agreement with Anthem Inc. after a federal judge, citing worries that market competition would be undermined, blocked the Indianapolis insurer's proposed $48 billion purchase.
Following the collapse of the deal, senior management of Cigna "engaged in various discussions with respect to potential business combination transactions as part of Cigna's evaluations of potential strategic alternatives, including regarding possible acquisitions, divestitures and business combination transactions," the company said in the SEC filing.
"However, none of the discussions resulted in significant discussions regarding a combination of Cigna and any third party (other than Express Scripts)," it said.
Express Scripts said it evaluated potential strategic alternatives, including acquisitions, divestitures and business combinations, but none resulted in "significant decisions regarding a combination of Express Scripts and any third party (other than Cigna)."
In June, members of the Express Scripts board of directors met with Express Scripts senior management and discussed, "among other things, evolving competitive dynamics, industry consolidation, risks and opportunities of Express Scripts as a standalone pharmacy benefit manager," the company said.
"At this meeting, the Express Scripts board of directors discussed a potential strategic transaction with a large publicly traded company in the health care industry," Cigna said.
Timothy Wentworth, chief executive officer of Express Scripts, updated the board Dec. 13 - 10 days after the CVS-Aetna deal was announced - on developments in the health care industry, including the CVS-Aetna tie-up.
"The Express Scripts board of directors discussed the potential strategic opportunities in the health care industry, the speed of change in the health care environment, the potential entry into the health care industry of significant new participants and the potential risks and negative consequences that could result if a transaction were to be agreed to but not successfully completed," Cigna said.
Among "strategic factors" behind its deal with Cigna, Express Scripts faces competition from health plans and others with integrated pharmacy benefits managers, "including as the result of the pending combination of CVS and Aetna," the companies said.
Pharmacy benefits managers are third-party administrators of prescription drug programs.
Anthem figured indirectly a second time in the Cigna-Express Scripts deal. Among the factors backing the agreement was flat revenue at Express Scripts, due in part to Anthem's decision to end its contract with Express Scripts in favor of setting up its own pharmacy benefits management unit.
When Cigna and Express Scripts announced the combination March 8, they said the agreement will "drive greater affordability," improve links within health care and prescriptions, while simplifying health care for customers.
The deal is expected to close later this year or early 2019. Cigna shareholders will own about 64 percent of the combined company, which will keep Cigna's name. Express Scripts shareholders will own about 36 percent.
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