Hedge Funds

Glenview's Larry Robbins takes on Carl Icahn, defends Cigna-Express Scripts deal

Key Points
  • Glenview Capital's Larry Robbins is supporting Cigna's deal to acquire Express Scripts.
  • Billionaire activist and Cigna shareholder Carl Icahn called the deal a "$60 billion folly" this week.
  • "Mr. Icahn has been misled by misinformation fed to him by analysts with short-term personal agendas," Robbins said.
Glenview urges support for Cigna-Express Scripts deal

Glenview Capital's Larry Robbins is defending Cigna's deal to acquire Express Scripts, a combination currently under siege by Carl Icahn, who calls it a "$60 billion folly."

"Our firm, Glenview Capital Management, is a 10-year investor in Cigna, and we support the Express Scripts transaction," Robbins said in a letter to Cigna shareholders Thursday. "Together, Cigna and Express Scripts will save their customers billions of incremental dollars annually with better healthcare outcomes, consistent with the social mission of each entity."

Cigna announced the $54 billion deal for pharmacy benefit manager Express Scripts in March amid a wave of consolidation in the health-care industry. Cigna rival Aetna had agreed to combine with drugstore chain and pharmacy benefit manager CVS Health months earlier in a deal that shook up the space.

The investor noted Cigna is getting Express Scripts at an attractive price that is 25 percent below historical transaction valuations for similar companies.

"Sensationalist headlines and intentionally misleading assertions from those with conflicting interests and limited analysis should not carry more weight than balanced diligence," Robbins said.

Robbins said his firm has an approximately $1.3 billion total investment in Cigna and Express Scripts, split about evenly between the two companies. Icahn has 0.56 percent of Cigna, worth roughly $250 million, The Wall Street Journal reported. Icahn also has a short position in Express Scripts.

'Mr. Icahn has been misled'

On Tuesday, Icahn urged Cigna shareholders to vote against the deal. The billionaire activist investor doesn't believe Express Scripts is a good company and called the price for Cigna "ridiculous." Icahn would rather see Cigna buy back its shares and pursue a partnership strategy with pharmacy benefit managers.

In the letter, Robbins directly addressed Icahn's objection.

"We believe that Cigna shareholders, including Mr. Icahn, would be hard pressed to explain how saving customers and payors so much money is harmful to society and the communities they serve, and that perhaps Mr. Icahn has been misled by misinformation fed to him by analysts with short-term personal agendas," Robbins said.

Cigna and Express Scripts shareholders are set to vote on the deal on Aug. 24.

Robbins is founder and CEO of Glenview Capital Management, a New York-based hedge fund firm. He has a net worth of $2.3 billion, according to Forbes.