Activist investor Carl Icahn once again called on Cigna Corp. shareholders to vote against the planned acquisition of pharmacy benefit manager Express Scripts Holding Co., saying that the transaction could become one of the "worst blunders" in corporate history.
Responding to a letter from Cigna intended to rally stockholder support for the deal ahead of an Aug. 24 vote, Icahn disputed the notion that Express Scripts earns very little from rebates, which he believes will be ultimately eliminated and deal a sharp blow to the pharmacy benefits management industry.
"I have little doubt that legislation will ultimately be passed to do away with rebates," Icahn wrote in a letter released Aug. 9.
Icahn disclosed that companies he controls spend more than $3 million a year on fees to Express Scripts. He said he would never pay the amount Express Scripts charges if his companies did not get back 95% of the rebates.
Icahn, who recently disclosed a nearly 5% stake in Cigna, earlier this week urged shareholders to vote against the transaction, saying that it dramatically overvalues Express Scripts. He also called Amazon.com Inc. an "existential threat" to the deal and the pharmacy benefits management industry as a whole. Amazon bought online pharmacy PillPack in June. Icahn believes that the online retail giant will not have to rely on rebates or produce profit margins on Express Scripts' level.
"It is inexplicably ridiculous for Cigna to risk $60 billion on Express Scripts in a deal that may well go down as one of the worst blunders in corporate history," Icahn said.