After losing in court for the third time over the $54 billion deal, Anthem has officially terminated its merger with Cigna, though court battles involving the failed acquisition appear to be far from over.
The last straw was the Delaware Court of Chancery’s decision to deny Anthem a 60-day injunction to prevent Cigna from pulling out of the deal. Judge Travis Laster said closing the deal now appears “incredibly unlikely” and therefore the extra time wasn’t warranted, though Anthem had already sought a U.S. Supreme Court review of the
“I recognize that this ruling will permit Cigna to terminate the merger and effectively end Anthem's path to closing,” he said in the hearing, according to Reuters.
Instead, it was Anthem which served Cigna a notice of termination. While the merger agreement had a $1.85 billion breakup fee for Cigna attached, Anthem argued the insurer isn’t entitled to it, citing failure “to perform and comply in all material respects with its contractual obligations.”
“On the contrary, Cigna’s repeated willful breaches of the Merger Agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna,” Anthem said in a press release.
Laster’s ruling in Delaware did offer some credence to Anthem’s claims, saying there was “significant evidence” Cigna breached the merger agreement, which could entitle Anthem to “potentially massive damages.”
Before the deal was blocked on antitrust grounds in February, the Department of Justice had mentioned the companies’ behind-the-scenes bickering. Those disagreements spilled out into the open after the U.S. District Court decision, with Cigna seeking $15 billion in damages and Anthem saying Cigna sought to “sabotage” the merger.
Cigna didn’t respond to a request for comment on the deal’s termination. It did say in a May filing with the Securities and Exchange Commission that it intends to “vigorously defend” its claims to damages and the breakup fee.
The death of the merger, which would have created the nation's largest insurer by some measures, was welcomed by the same medical organizations that opposed it since it was first announced in 2015.
“The termination of the Anthem-Cigna merger is a clear victory to preserve competition in the health insurance industry,” American Medical Association President Andrew Gurman, MD, said in a statement. “To the detriment of patients, there is already far too little competition among insurers. Networks are already too narrow, and premiums are already too high. Competition, not consolidation, is the right prescription for health insurance markets.