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Deal Diary: Cravath, Wachtell Lead Health Care Service Deal With Cigna

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Published: February 6th, 2024
Health Care Service turns to Cravath for M&A counsel on a $3.7 billion agreement to buy a suite of businesses from Cigna, which uses Wachtell.

Cigna Group (CI) turned to David E. Shapiro and Jenna E. Levine of Wachtell, Lipton, Rosen & Katz for counsel on a $3.3 billion agreement to sell its Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses to Health Care Service Corp. in a deal announced Wednesday, Jan. 31.

Cigna used Stuart Smith and Michael Muntner at Centerview Partners LLC along with Morgan Stanley for financial advice. Rick Rule, Daniel J. Howley and Justin Heipp of Rule Garza Howley LLP are antitrust counsel to the Bloomfield, Conn.-based insurer. Tara Dwyer and Lauren M. Moldawer of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC are regulatory counsel to Cigna, which is relying on Stephanie H. Dobecki, Andrew R. Holland, Jonathan J. Kelly and Alexander E. Koster of Sidley Austin LLP for insurance counsel.

The seller’s in-house team on the deal includes general counsel Nicole Jones, chief counsel – corporate transactions and tax law Lisa Burnett and chief counsel Cigna Healthcare and deputy general counsel, legal Erin Wessling.

Shapiro and Levine advised Cigna on the $5.6 billion sale of its personal accident, supplemental health and life insurance business in Asia-Pacific to Chubb Ltd. (CB) in 2022; the $6.3 billion sale of its group life and disability insurance business to New York Life Insurance Co. in 2020; and the $69 billion purchase of Express Scripts Holding Co. in 2018.

They also worked with Cigna on its 2023 investment in VillageMD as part of Village Practice Management Co. LLC’s 2023 purchase of Summit Health-CityMD for $8.9 billion.

HCSC relied on Aaron M. Gruber and Claudia J. Ricciardi of Cravath, Swaine & Moore LLP for counsel. Morgan J. Tilleman and senior counsel J.J. Silverstein and Kinal M. Patel of Foley & Lardner LLP were insurance counsel to HCSC.

Benjamin Singer, Caitlin Bair and counsel Alix R. Sandman of O’Melveny & Myers LLP and Paul W. Pitts, Robert J. Hill and James F. Hennessy of Reed Smith LLP also gave regulatory counsel to the buyer, a Chicago-based customer-owned health insurer where chief legal officer, vice president – corporate legal Catherine Nelson and transactions Arlene Lim and senior associate general counsel Julie Snyder worked on the deal.

Richard A. Landgarten, Gary J. Posternack and Michal Lementowski at Barclays and Eric B. Rabinowitz at JPMorgan Securities LLC gave financial advice to HCSC.

Lementowski and Foley & Lardner’s Steven W. Vazquez advised HCSC on its 2022 acquisition of Trustmark Health Benefits from Trustco Holdings Inc. O’Melveny worked with HCSC on the 2017 sale of TMG Health Inc. to Cognizant Technology Solutions Corp. (CTSH).

The companies plan to close the deal in the first quarter of 2025, pending regulatory approvals.

HCSC said in its release that it agreed to a purchase price of $3.3 billion. Cigna, however, placed a value of $3.7 billion on the deal and said HCSC had agreed to a four-year services agreement under which Cigna subsidiary Evernorth Health Inc. will continue to provide pharmacy benefit services to the Medicare businesses after the deal closes.

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