After a more than two-year court battle, a Delaware judge on Monday barred both Cigna and Anthem from recovering damages associated with a failed merger agreement.
Delaware Chancery Court Judge Travis Laster in a 311-page memorandum opinion labeled the companies’ failed merger deal and subsequent bitter breakup “a battle for power” as he favored certain claims for each company.
Bloomfield-based health insurer Cigna and Anthem, a Blue Cross and Blue Shield Association licensee in more than a dozen states, decided to merge in 2015. But the Justice Department opposed the deal, saying it would restrict competition and result in higher premiums and poorer heath care. A federal appeals court agreed, with Supreme Court Justice Brett Kavanaugh, then a judge serving in that court, the only dissenter.
The merger agreement included a $1.85 billion “breakup” fee, payable to Cigna, if the ill-fated $54-billion deal collapsed. But in the bitter aftermath of the courts’ decisions, Cigna decided it deserved more — a lot more.
In early 2017, Cigna sued in the Delaware chancery court, arguing it is owed more than $16 billion as the injured party. Anthem countered it is owed $20 billion because Cigna sabotaged the deal.
The two-week trial based on the competing claims ended last week.
While Laster’s ruling was critical of both companies on Monday, he wrote that Anthem attempted to take initial steps to pursue the deal, and Cigna attempted to derail it.
During previous court testimony, Anthem lawyers alleged Cigna CEO David Cordani privately expressed regrets about agreeing to merge with Anthem, despite publicly backing the deal because it would be good for the company’s shareholders.
At the time of signing their deal, Anthem agreed to pay Cigna’s shareholders a premium of 38.4 percent, or $13.4 billion.
The deal also called for then-Anthem CEO Joseph Swedish to claim the top spot in the merged companies.
Anthem lawyers argued in court that Cordani wanted to remain in charge of Cigna and he, senior management and board members at Cigna decided to sabotage the merger to keep their jobs and capture the $1.85 billion breakup fee.
“The parties’ positions became increasingly adversarial, and the Cigna (executive leadership team) turned definitively against the Merger,” Laster wrote in his ruling Monday. “There is no signpost marking exactly when this happened, but by late March and early April 2016, the Cigna ELT wanted the transaction to fail so they could continue managing Cigna as an independent company.”
A CT Mirror report contributed to this story
