Cigna Corp. said Tuesday it is suing its merger partner Anthem Inc. in U.S. District Court for nearly $15 billion as the Bloomfield-based insurer tries to get out of the $54 billion deal, which was recently rejected by federal court.
In its suit, Cigna is seeking a declaratory judgement that it has lawfully terminated the merger agreement and that Indianapolis-based Anthem is not permitted to extend the termination date. Cigna said it wants a $1.85 billion termination fee as well as $13 billion in additional damages.
“Cigna 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,” the insurer said in a statement.
Last week, U.S. District Judge Amy Berman Jackson denied the proposed $54 billion merger between the two insurance giants, citing antitrust concerns that would make the covered markets “anticompetitive.”
Anthem immediately responded that it was going to appeal the decision. On Jan. 18, Anthem says, it had extended the merger agreement through April 30, and Cigna has no right to extricate itself from the deal.
“Anthem will continue to enforce its rights under the merger agreement and remains committed to closing the transaction,” it said in a statement.
Cigna says it is basing its decision on the federal court rejection of the merger. The court determined a combined company would decrease competition and lessen choice in the “national accounts” market, in part because the members of the Blue Cross Blue Shield network work together to win national business; and that such harm could not be offset by claimed efficiencies.
Cigna also noted it is “disappointed in the outcome of this process” and had believed that the merger “had the potential to expand choice, improve affordability and quality and further accelerate value-based care.”
Cigna is also announcing that its board of directors has expanded the company’s share repurchase authority to an aggregate amount of $3.7 billion, capping the amount of the repurchase to $250 million per quarter until there is more clarity with respect to the Anthem lawsuit.
