Anthem Ends Cigna Pursuit, Plans to Seek Damages -- 2nd Update
May 12 2017 - 4:49PM
Dow Jones News
By Anne Steele
Anthem Inc. on Friday terminated its long-troubled merger
agreement with Cigna Corp., adding that it wouldn't pay a
termination fee and promised to "vigorously pursue" damages claims
against the insurer.
The statements come a day after a Delaware judge said Cigna
could abandon its proposed $48 billion merger with Anthem,
declining to give Anthem more time to salvage a deal federal courts
had already blocked on antitrust grounds.
Anthem said Cigna isn't entitled to a $1.85 billion termination
fee because it "failed to perform and comply in all material
respects with its contractual obligations."
"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," according to a statement.
In addition to the breakup fee, Cigna plans to seek damages of
more than $13 billion from Anthem. In a statement, Cigna said it
"has a clear path to create value in the marketplace" now that the
merger is dead. The company also said it plans to increase share
repurchase activity.
The deal has been on the rocks for several months with both
companies accusing one another of violating the merger
agreement.
The Justice Department filed a lawsuit to block the merger last
year amid concerns the combination would substantially lessen
competition in insurance markets around the country.
A federal judge blocked the deal in February and an appeals
court upheld the decision against Anthem last month. But Anthem
sought to press forward and recently asked the U.S. Supreme Court
to intervene, a request that faced long odds.
Separate from the federal antitrust case, Anthem and Cigna sued
one another in Delaware, and Anthem wanted Vice Chancellor J.
Travis Laster, a judge on the Delaware Chancery Court, to issue an
injunction that would have prevented Cigna from terminating the
deal.
Judge Laster in a Thursday afternoon hearing denied Anthem's
injunction request, saying the company's chances of saving the
merger were remote.
However, the judge also said Anthem may have a strong case that
Cigna didn't live up to its commitment to try to preserve the
tie-up. The judge said Anthem at some point may have a chance to
collect a large monetary damages award against Cigna.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 12, 2017 16:34 ET (20:34 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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