Cigna sues to end merger deal, seeks $15 billion from Anthem

Cigna Corp.

Cigna headquarters in Bloomfield

Washington – The tumultuous relationship between proposed merger partners Anthem and Cigna continued Tuesday as Cigna called for an end to the deal and demanded almost $15 billion from Anthem – which said it is “committed to closing the transaction.”

Cigna filed suit in Delaware Court of Chancery Tuesday saying it was terminating an agreement reached with Anthem in the summer of 2015 to merge and is seeking a $1.85 billion “breakup fee” pursuant to the terms of that agreement.

Cigna also said it is seeking “damages incurred,” including “$13 billion in lost premium value to Cigna stockholders caused by [Anthem’s] willful breaches of the merger agreement.”

In a statement, Anthem said it had extended the merger agreement with Cigna through April 30 of this year and its proposed partner can’t back out now.

“Under the terms of the Merger Agreement, Cigna does not have a right to terminate the agreement,” Anthem said. “Therefore, Cigna’s purported termination of the Merger Agreement is invalid.  Anthem will continue to enforce its rights under the Merger Agreement and remains committed to closing the transaction.”

The Justice Department blocked the merger last summer, saying a marriage of the insurers would kill competition in many markets for large-business health insurance policies, also known as “national accounts.”

A federal judge agreed, ruling last week the $54 billion merger would violate U.S. antitrust laws. Anthem almost immediately filed a notice of appeal.

But Cigna says it now believes the transaction “cannot and will not” win approval and ending it is in the best interest of the shareholders.

During the month-long antitrust trial that began in early December, Justice Department lawyers argued that, in addition to the antitrust issues, strained relations between the top executives of Anthem and Cigna doomed the merger to failure.

In her order Judge Amy Berman Jackson said Cigna was “actively warning against” the merger and provided “compelling testimony” that brought projected savings from the deal into question.

Cigna stopped cooperating with Anthem after the Justice Department filed suit against the merger in July of last year, according to court testimony.

A federal judge also blocked a proposed $37 billion merger between Aetna and Humana last month.

Unlike Anthem, Aetna said on Tuesday it is abandoning its efforts to merge and will pay Humana a $1 billion breakup fee.