Companies
16/02/2017

Seeking to Block Termination of Merger, Anthem Obtains Restraining Order on Cigna




Smaller rival Cigna Corp was delivered a restraining order that blocks it from officially terminating their proposed $54 billion merger after Anthem Inc won a temporary that would delay the transaction that has already been rejected by U.S. antitrust regulators.
 
Saying it would keep the deal together so Anthem could appeal its loss against the Justice Department, Judge Travis Laster of Delaware's Court of Chancery granted the temporary order.
 
The largest U.S. health insurer would have been created by the deal. Representing an unprecedented consolidation among U.S. health insurers, Rivals Aetna Inc and Humana Inc had sought their own merger.
 
After the Justice Department put in a requested, federal judges struck down both deals as anticompetitive in separate rulings. While Anthem filed an appeal of its ruling, Aetna and Humana said on Tuesday they were ending their deal.
 
Cigna, however, said that Anthem was required to pay a $1.85 billion break-up fee under their agreement and it had notified Anthem it had ended the deal.
 
Seeking legal sanction for its decision to end the deal and $13 billion in damages, a law suit has also been filed by Cigna.
 
Anthem argued that there is still enough time to complete the transaction first announced in July 2015 in a lawsuit that it filed on Wednesday in response which requested a temporary restraining order that would prevent Cigna from ending the deal.
 
 
In the lawsuit, Anthem said "Cigna's lawsuit and purported termination is the next step in Cigna's campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the Merger Agreement."
 
Anthem's allegations were meritless, Cigna said.
 
Either by way of a successful appeal or through a settlement with the new leadership at the Justice Department under the Trump administration, Anthem said it remained committed to complete the merger and it was pursuing an expedited appeal of the court decision.
 
Maintaining that the effort was doomed, Cigna said: "There is no viable path to completing this transaction."
 
Cigna had mentioned on Tuesday that it has enhanced the rate of repurchase of its shares through program that is pegged at $3.7 billion. The company further mentioned in the same statement that every quarter, it program of share repurchase would be limited to an amount of about $250 million. There were however questions raised by some analysts that this new program of repurchase of shares could be a signal by the company whereby the insurer was seeking an acquisition.
 
"We believe this suggests Cigna was looking to deploy the capital in another way, potentially M&A, but we are hesitant to suggest another public-public merger offer," Piper Jaffray analyst Sarah James said in a client note.
 
(Source:www.reuters.com)

Christopher J. Mitchell
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