Cigna has officially terminated their agreement to merge with major insurer, Anthem, and has also filed a legal suit against the company. In early February of 2017, a federal-based judge informed the two insurance companies that a merger between the two would violate the current antitrust laws that are in place in the nation.
This violation would reduce the competition within the market of national accounts. As a result, the judge issued a ruling against the planned merger. While Anthem has plans to push through with an appeal, Cigna has elected to agree with the ruling. The statement issued by Cigna expresses agreeance with the ruling and that it is within the interests of the company’s shareholders to retain the ruling in the case.
Cigna has now elected to move forward by filing a suit against Anthem. This is a measure that is required to obtain an official declaration to terminate their agreement for the merger and to outline the fact that Anthem will not be allowed to extend the original date of termination in the case.
The “break-up” between these two major insurers officially took place on Valentine’s Day – proving, once again, when it comes to business, there is absolutely no love – especially between major players in the insurance industry. The suit includes a request for Anthem to compensate Cigna the $1.85 billion fee for termination of the merger and damages in excess of $13 billion.
These requests come as a result of the breaches associated with the original merger agreement with Anthem. Cigna has established the fact that these breaches have lowered the value of the stocks held by the stockholders within their company.
Anthem states that Cigna does not have any legal rights to terminate the original merger agreement – despite the federal court’s initial ruling. In fact, Anthem states that it will continue a commitment to ensuring that the agreement transaction is officially closed. Cigna attempted to resolve this issue outside of litigation; unfortunately, Anthem is having no part in the process.
In addition to this large “break-up” between insurers on Valentine’s Day, Humana and Aetna officially announced their decision to electively terminate the agreement to merge. In January of 2017, a federal judge ruled to block their agreement – much like the ruling in the Cigna and Anthem merger. However, Aetna made an executive decision to cooperate with Humana and return the termination fee outlined in their agreement. While Anthem has declined this request, Cigna is pushing forward with the courts to win their fees and damages.
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