Cigna terminates $54bn merger deal with Anthem
Cigna is scrapping its plan to merge with rival Anthem, and is suing insurer for $13bn in damages because the agreement did not secure approval.
The health insurer said it was terminating the merger with Anthem after a federal judge blocked the deal over anti-competitive grounds.
In connection with the termination, Cigna has filed a lawsuit against Anthem, seeking payment of $1.85bn as reverse termination fee along with compensation for additional damages amounting to over $13bn.
The health insurer stated that the amount covers the premium that its shareholders did not realize owing to the failure of the merger deal.
A statement released by Cigna in this connection read: “The decision to terminate the transaction and seek damages follows the District Court’s findings that the merger would decrease competition and lessen choice in the “national accounts” market, in part because the members of the Blue Cross Blue Shield network work together to win national business, and that the competitive harm could not be offset by claimed efficiencies.”
Cigna said the lawsuit was filed in the Delaware Court of Chancery with an objective to get a declaratory judgment that it has terminated the merger agreement lawfully. It also added in the lawsuit that Anthem cannot be allowed to extend the termination date.
Anthem on the other hand has released a statement which read: "Under the terms of the merger agreement, Cigna does not have a right to terminate the agreement. Therefore, Cigna’s purported termination of the merger agreement is invalid.”
Earlier in the month, a US federal judge Amy Berman Jackson said that the proposed Anthem-Cigna merger would have further worsened the already highly concentrated health insurance market.
The judge noted that the merger had the potential of increased premium costs and decreased product innovation, the judge blocked the proposed transaction.
Cigna stated that it will carry on investing in innovative solutions and programs, expanding its share repurchase authority to $3.7bn while committing to partner with health care professionals to create value-based care programs.
Image: Health insurer Cigna decided to terminate merger deal with Anthem. Photo: courtesy of everydayplus/Freedigitalphotos.net.