Neither Cigna nor Anthem Win Damages After Failed Deal -- WSJ
By Anna Wilde Mathews and Peg Brickley
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 1, 2020).
Cigna Corp. and Anthem Inc. won't have to pay damages to one
another over their failed $48 billion merger deal, a Delaware judge
decided Monday, potentially resolving a bitter, yearslong legal
battle that had the two insurance giants trading accusations of
In dueling lawsuits, each of the health-insurance giants sought
billions of dollars in damages from the other. Both companies
argued that its erstwhile partner had sabotaged their proposed
combination, which foundered in 2017 after court rulings against
the merger on antitrust grounds. Cigna wanted damages of $14.7
billion, along with a breakup fee of about $1.8 billion, from
Anthem. Anthem sought damages of $21.1 billion from Cigna.
Vice Chancellor J. Travis Laster, of the Delaware Chancery
Court, wrote that Anthem had sought to complete the merger and
"chose a sound strategy and took all of the actions necessary and
appropriate to pursue it." Cigna, he said, had breached its
obligation to try to consummate the deal: "Rather than seeking to
complete the Merger, Cigna sought to derail it," he wrote.
Calling the drama a "corporate soap opera," Judge Laster
attached blame to both sides. Cigna proved that it was likely that
the deal would have been blocked regardless of its actions, he
wrote. In the end, "each party must bear the losses it suffered as
a result of their star-crossed venture."
Shares in Cigna fell 2.1% on the New York Stock Exchange, while
shares in Anthem rose 1.5%.
Investors had largely discounted the likelihood of sizable
damage awards in the litigation, but some believed Cigna might
still get the breakup fee, which the judge didn't uphold, said
Matthew Borsch, an analyst with BMO Capital Markets. "That was a
little bit of a positive surprise for Anthem investors, and a
little bit of a negative surprise for Cigna investors," he
In a written statement, a spokeswoman for Cigna said the company
is "pleased that the Court agreed with us that Cigna did not cause
the merger to fail." The company still believes in its case and is
"evaluating our options with respect to appeal," she said.
A spokeswoman for Anthem said the insurer is "satisfied with the
decision determining that Cigna breached its obligation to use best
efforts to obtain regulatory approval for the merger," and
forfeited the breakup fee.
Anthem said in July 2015 that it would acquire Cigna, in a
combination the two insurers initially pitched as bringing together
complementary assets. In 2016, the Justice Department filed an
antitrust suit to block the deal and courts sided with the
antitrust enforcers, ruling against the merger in February 2017 and
again later that year on appeal.
Behind the scenes, conflict between the two companies festered
even as they pursued the deal. Each filed suit against the other
after the antitrust rulings. During the litigation, they traded
accusations of deception. Anthem claimed that Cigna and its chief
executive, David Cordani, tried to sabotage the deal partly over
concern about Mr. Cordani's future role in the combined
In his decision, Judge Laster wrote that by the spring of 2016,
the Cigna leadership team "wanted the transaction to fail so they
could continue managing Cigna as an independent company," and the
company orchestrated a campaign to undermine the deal. For its
part, Anthem misleadingly tried to portray its relationship with
Cigna as solid while trying to hold the deal together, among other
questionable actions, Judge Laster wrote.
Write to Anna Wilde Mathews at firstname.lastname@example.org and Peg
Brickley at email@example.com
(END) Dow Jones Newswires
September 01, 2020 02:47 ET (06:47 GMT)
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