The deal, as pointed out by Carl Icahn’s letter to Cigna’s shareholders, has at least two significant areas of concern.
On Tuesday, billionaire investor Carl Icahn urged Cigna Corp’s shareholders to vote against Cigna’s $52 billion acquisition of Express Scripts Holding Co citing regulatory headwinds and growing threats from Amazon.com Inc.
The deal has attracted skepticism from investors since Amazon.com’s entry in the health sector is likely to significantly boost competition; compounding the problem will be President Donald Trump’s push to cut rebates which will hurt the profitability of the pharmaceutical industry.
“When Amazon starts to compete as we believe they will, with their 100 million Prime users and scale distribution system, they will have no trouble breaking into the so-called ecosystem,” wrote Icahn in his letter to Cigna’s shareholders. “With lower prices, the beneficiary will be American consumer, not the owners of Express Scripts.”
Icahn, who has a long position on Cigna and a short position on Express Scripts, said in a letter titled “Cigna’s $60 billion folly” that the insurer was overpaying for Express Scripts.
Last week, Cigna stated it was confident of winning shareholder approval for its acquisition of Express Scripts.
Shareholders are set to vote on August 24.
Cigna and Express Scripts were not immediately available for comment.