After more than a year of review and another six months in court, only to lose, it looks like health insurer Anthem’s plan to buy rival Cigna is truly dead in the water. Cigna announced today that it’s terminating the agreement to merge, but this breakup is far from mutual. Instead of simply going off their separate ways, Cigna is now suing Anthem, seeking billions in damages.
Anthem announced its intention to buy Cigna for $54 billion in July, 2015, just after Aetna and Humana announced their plans to merge.
After a year of review, however, the federal government and nine attorneys general sued to block both mergers, saying that reducing the marketplace from four national insurers to two would have enormous harms on competition.
Judges, clearly, agreed. One ruled against the Aetna/Humana deal in January, and a few weeks later that was chased by another judge blocking the Anthem/Cigna deal as well.
However, while Aetna and Humana sadly agreed to part ways earlier today, Cigna has come out swinging.
“In light of the Court’s ruling,” Cigna writes, it “believes that the transaction cannot and will not achieve regulatory approval and that terminating the agreement is in the best interest of Cigna’s shareholders.”
So far, so good; that’s how these things go. Cigna is seeking a $1.85 billion reverse termination fee from Anthem, which is par for the course when a merger fails.
However, Cigna is going further and also asking for “additional damages in an amount exceeding $13 billion.”
Why so much? Cigna isn’t looking to recoup money it lost, exactly; instead, it’s seeking to recoup potential money it never made.
“These additional damages include the amount of premium that Cigna shareholders did not realize as a result of the failed merger process. This action is necessary to enforce and preserve Cigna’s rights and protect the interests of its shareholders,” as Cigna puts it.
Cigna also expresses its disappointment that the merger failed, saying that it, “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.”
But don’t point the finger at us for this, the statement implies: It was Anthem that was in charge of the “full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy,” so you can feel free to blame Anthem. Cigna certainly seems to.
by Kate Cox via Consumerist