Finance

Anthem sues to stop Cigna from killing merger

Anthem sues to stop Cigna from killing merger”

Aetna, which is based in Hartford, Conn., mutually ended its $34 billion merger agreement Tuesday with Humana, which is based in Louisville, Ky., after a federal court blocked the health insurance companies' deal on antitrust grounds.

Cigna is also seeking payment by Anthem of the $1.85 billion breakup fee, as well as additional damages of more than $13 billion.

"Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process", the insurer said in a statement.

On the heels of Aetna's (AET - Free Report) and Humana's (HUM - Free Report) announcement, health insurance competitors Cigna (CI - Free Report) and Anthem (ANTM - Free Report) also announced that their merger deal is done-zo. "('Anthem"), Cigna Corporation ('Cigna") and the combined businesses of Anthem and Cigna that is meant to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995.

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Both proposed mergers were blocked by federal judges, who agreed with Justice Department antitrust regulators that reducing the number of major United States insurers from five to three could harm consumers.

Anthem responded that the merger agreement was in place until April 30, 2017, and that Cigna could not back out. Indianapolis-based Anthem had said that it would appeal the ruling. It's also wants to force Cigna to stick to the terms of their deal, and is requesting damages.

Judge Amy Berman Jackson of the D.C. District Court sided with antitrust regulators February 1 and determined that the proposed merger would violate antitrust laws by monopolizing too much of the healthcare insurance market.

Had they gone ahead, the insurance industry would have been dominated by three giants, as opposed to five companies. The other - between Aetna Inc. and Humana Inc. - was abandoned by the companies on Tuesday after they decided against an appeal. The dispute is the culmination of months of squabbles and a deteriorating relationship between Anthem and Cigna executives that ultimately factored in to U.S. District Court Judge Amy Berman Jackson's decision.

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Aetna jumped 3.2 percent and Humana dipped 0.3 percent.

The cases are Anthem Inc. v. Cigna Corp., No. 2017-114, Delaware Chancery Court (Wilmington) and Cigna Corp. v. Anthem Inc., 2017-0109, Delaware Chancery Court (Wilmington).

Last week, a federal court judge rejected the proposed merger on antitrust and anti-competitive concerns.

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