By Caroline Humer
(Reuters) - Health insurer Cigna Corp's
The new company will marry Cigna's business of managing health plans for corporations and the government with Express Scripts'
"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger,” Cigna Chief Executive David Cordani said in a statement.
Wall Street analysts had expected the antitrust approval as the companies have little overlap in their businesses.
The decision may also bode well for the pending U.S. antitrust review of CVS Health Corp's
“The Justice Department review of CVS’s planned purchase of Aetna is wrapping up and may conclude this month, but will take longer because of divestitures needed to resolve competitive concerns," a source familiar with the matter told Reuters.
The Justice Department in 2016 successfully blocked a pair of large health insurance mergers it believed would limit competition in the industry. Those were Aetna's plan to acquire smaller U.S. health insurer Humana Inc
Aetna and Cigna, however, were determined to seek growth through deals while responding to a changing healthcare landscape, eventually targeting mergers with the nation's largest pharmacy benefit managers (PBMs).
Antitrust experts have described those deals as vertical combinations that present fewer issues than the failed insurer mergers. That view was bolstered after the Justice Department lost its case to stop AT&T's
Cigna and Express Scripts said they have already obtained clearances for the deal from departments of insurance in 16 states and are working with regulators in remaining jurisdictions to obtain clearance for the merger.
They continue to expect the deal to close by the end of the year, subject to the satisfaction of all closing conditions.
Cigna shares closed up 1.4 percent. Express Scripts shares closed up 3.7 percent.
(Reporting by Caroline Humer in New York, Diane Bartz in Washington and Aakash B in Bengaluru; Writing by Bill Bekrot; Editing by Bill Rigby)