Behind-the-scenes bickering is clouding Anthem Inc.’s pending buyout of Cigna Corp., the Wall Street Journal reported Sunday.
The disagreements could delay the U.S. Justice Department’s antitrust review, the report says, but adds that the discord likely won’t stop the acquisition.
Shareholders of Hartford-based Cigna and Anthem, with headquarters in Indiana, approved Anthem’s $54 billion proposed acquisition of Cigna in December.
However, even the anticipated completion date for the merger, originally projected for the second half of 2016, has become a bone of contention, the report says.
In a report to stockholders on May 6, Cigna officials said that the merger might not be complete until 2017. Anthem officials, meanwhile, have indicated no change is expected in the projected completion date.
Neither company commented in the Journal’s report.
The Wall Street Journal cites letters between the companies’ officials in which executives accuse each other of violating agreements in the merger document, which was finalized last summer.
One focus of the disagreement is a recent lawsuit Anthem filed against Express Scripts Holding Co., a supplier of prescription drugs, claiming it overcharged the insurer, the report says.
According to the Journal, Cigna Chairman Isaiah Harris Jr. wrote an April 9 letter to Anthem’s board of directors in which he said the lawsuit might hinder regulatory approval. Anthem officials replied that that the company had fully disclosed the possibility of a lawsuit when merger talks began. In addition, Anthem officials said, the legal action could result in lower prices for drugs from Express Scripts, which would benefit the merged company.
Anthem officials also have criticized Cigna for failing to meet deadlines for submitting documents to the Justice Department, the report says.
Cigna executives countered that Anthem has dragged its feet on providing a backup plan, including potential divestitures, should the Justice Department demand such concessions before approving the buyout, according to the report.
Also exacerbating tensions between the two companies, the report says, is debate over the post-merger role of Cigna CEO David M. Cordani. Under terms of the agreement, Anthem President and CEO Joseph R. Swedish will be chairman and CEO of the combined company. The merged companies will operate under the Anthem name, will be based in Indianapolis, and will be 67 percent owned by Anthem shareholders.
Cordani will be moved into the diminished role of president and chief operating officer.
The newspaper report says that there had been an effort by Anthem officials to give Cordani oversight of only a portion of the combined companies’ operations. Anthem later relented, the report says, agreeing to give Cordani oversight of all business operations.
Anthem what will happen to Cigna’s 4,200 Connecticut employees. Such mergers often mean layoffs to eliminate duplicated positions.
Cigna relocated its corporate headquarters from Philadelphia to Bloomfield in 2012 and added 200 jobs in Connecticut in exchange for up to $71 million in state tax breaks.
