Cigna is suing Anthem for $13 billion after walking away from their merger

pulse

February 14, 2017 8:07 PM

Cigna is terminating the merger with Anthem after a federal judge blocked the deal on anti-competitive grounds.

In a Friday, May 6, 2016 photo, LSU medical student Felicia Venable, left, briefs fellow students and medical residents on a patient they are visiting during daily rounds with a group of medical residents and medical students at Our Lady of the Lake Regional Medical Center in Baton Rouge, La.

Cigna is scrapping its plan to merge with rival Anthem, and is suing Anthem for $13 billion in damages because the deal couldn't get approved.

The health insurer said it was terminating the merger with Anthem after a federal judge blocked the deal over anti-competitive grounds.

Anthem was attempting to appeal the judge's decision blocking the merger, and looking to fast track of the appeal process.

Cigna claims that the $13 billion is to make up for "the lost premium value to Cigna's shareholders caused by Anthem's willful breaches of the Merger Agreement" and that the company was "disappointed in the outcome" of the merger process.

"Cigna believed from the outset that the merger of the two companies had the potential to expand choice, improve affordability and quality and further accelerate value-based care," the company said in a press release.

"Anthem contracted for and assumed full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy, under the merger agreement. Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process."

The merger would have made the combined company the largest health insurer in the US based on the number of lives covered.

Anthem, in a statement, said that the terms of the agreement do not allow Cigna to back out of the merger and the company intends to follow through on the deal.

"On January 18, 2017, Anthem extended its Merger Agreement with Cigna through

One of the factors in the decision by a federal judge to block the merger was Cigna's seeming trepidation with the deal during court proceedings, which the judge called the "elephant in the courtroom." Transcripts of the proceedings released in November November showed that Cigna CEO David Cordani appeared unsure of the deal during testimony.

In addition to the dealing with Anthem, Cigna announced that it plans to increase its share buyback program to $3.7 billion and plans to buy back up to $250 million in shares per quarter.

pulse