Activist investor Carl Icahn is urging other Cigna shareholders to vote against its deal to buy Express Scripts.
In a letter to shareholders, entitled "Cigna's $60 billion folly," Icahn claims that Cigna (CI) is dramatically overpaying for a "highly challenged" Express Scripts (ESRX), which faces existential risks.
One of those risks is Amazon, which just purchased online prescription drug company PillPack. Icahn believes Amazon could one day put Express Scripts out of business.
"Even if they do survive, exposing Cigna, a thriving company, to these risks by acquiring Express Scripts now is inexplicably ridiculous," Icahn said. "Purchasing Express Scripts may well become one of the worst blunders in corporate history."
Icahn also said he is worried about the Trump administration's efforts to rein in drug costs, coupled with proposals to limit the ability for drug manufacturers to give rebates to pharmacy benefits managers such as Express Scripts, which is key to their operations.
"It is patently ridiculous to pay $60 billion for a company with the problems Express Scripts now faces," Icahn said.
Cigna agreed in March to buy Express Scripts in deal then valued at $67 billion, but it needs shareholder approval to close the transaction. Icahn holds less than 5% of Cigna's shares. He said is holds a short position on Express Scripts, betting that the stock will fall.
Shares of Express Scripts plunged last week when the Wall Street Journal first reported that Icahn planned to come out against the deal.
