Carl Icahn moves to sink Cigna's $54B deal for Express Scripts

NEW YORK - Carl Icahn is urging Cigna shareholders to vote against the health insurer's proposed $54 billion takeover of pharmacy benefits manager Express Scripts.

In a public letter, the billionaire activist investor said Cigna is "dramatically overpaying" for Express Scripts,, describing the target company as "facing existential risks on several fronts." That includes intense competition from Amazon and regulatory risks, while it could also lose the business of other health insurers that won't want to deal with a company owned by a rival, Icahn wrote.

Icahn said Amazon will have no problem competing, given its 100 million members.

"Competitive risk from Amazon, arguably the strongest competitor in the world, will be an existential threat to [pharmacy benefit managers] like Express Scripts, possibly challenging their very existence," he wrote.

In January, Amazon, Berkshire Hathaway and JPMorgan Chase announced that they were forming a new company to address health care costs for their U.S. employees, and possibly for many more Americans.

Insurers and pharmacy benefits managers - which run drug plans for insurers and employer-based plans - have struggled to keep costs under control.

That has led to a significant consolidation in the health care industry, with major players attempting to merge as a way to drive down costs.

Icahn, who holds a stake in Cigna, suggested that the company instead consider multi-year partnerships with a pharmacy benefit manager, possibly even Express Scripts, while the sector deals with the challenges it's facing.

He recommended Cigna buy back some of its stock, which would benefit Icahn and other shareholders.

"[I]t should be noted that Cigna has done very well on its own, and there may well not be a need for PBM capabilities once the landscape changes and/or Amazon and other competitors materialize," he wrote.