Express Scripts Shares Leap on $67 Billion Cigna Takeover Play

Express Scripts Holding Co. (ESRX) shares opened at the highest level in more than two years Thursday after U.S. health insurance giant Cigna Corp. (CI)  said it would pay $67 billion for the country's largest benefits management group.

Cigna said it will pay $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, a deal that values the equity of the St. Louis, Mo.-based Express at $54 billion. Adding $15 billion in Express Scripts debt takes the enterprise value to around $67 billion, the companies said.  The deal, which has been approved by both boards, extends one of the most significant shake-ups in the U.S. healthcare industry in decades following last year's changes to the Affordable Care Act and the impending entry of non-sector rivals such as Amazon Inc.  (AMZN)  , Berkshire Hathaway Inc. (BRK.A) , (BRK.B) and JPMorgan Chase & Co. (JPM) .

Amazon and JPMorgan are holdings in Jim Cramer's Action Alerts Plus.

"Cigna's acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers," said Cigna CEO David Cordani. "This combination accelerates Cigna's enterprise mission of improving the health, well-being and sense of security of those we serve, and in turn, expanding the breadth of services for our customers, partners, clients, health plans and communities."

"Together, we will create an expanded portfolio of health services, delivering greater consumer choice, closer alignment between the customer and health care provider, and more personalized value," Cordani added. "This combination will create significant benefits to society and differentiated shareholder value."

Express Scripts shares were marked 16.3% higher at the opening bell and changing hands at $84.53 each, the highest since January 2016, in a move that values the St. Louis, Mo.-based group at just over $47 billion. Cigna Corp shares, meanwhile, traded 6.56% lower at $181.71 per share, a move that would extend its year-to-date decline to around 11%.

As TheStreet's Brian Sozzi noted Wednesday, Amazon's presence in the U.S. healthcare market, through its partnership with Warren Buffett-led Berkshire and JPMorgan, "could make acquisitions to create a larger group with ambitions across the larger economy."

The trio's ambition of a non-profit group offering "simplified, high-quality and transparent healthcare" for its combined 500,000 employees could ultimately see it negotiating directly with pharmaceutical companies, hospitals and doctors in order to lower costs and expand the services it would offer.

The move followed last December's blockbuster $77 billion takeover of health insurer Aetna Inc. by CVS Health Corp. and came just weeks before Cerberus Capital Management LP-backed Albertsons Cos. has announced an agreement to acquire Rite Aid Corp. (RAD) in a deal that could create a retail outfit with $83 billion in revenue.

A combined Alberstons-Rite Aid would mark another significant change in the U.S. retail landscape, which was upended last summer by Amazon Inc.'s (AMZN) $13.7 billion purchase of Whole Foods Markets . If the deal is ultimately completed, Alberstons would get deeper access into the pharmacy sales segment while Rite Aid would be able to ramp-up its online offering and challenge both Walgreens Boots and CVS Health Corp.