- Anthem announced Friday it will file a petition to take the Court of Appeals' 2-1 decision from last week upholding the court blocking of its $54 billion purchase of Cigna to the U.S. Supreme Court.
- The health insurance giant in its announcement pointed to the dissenting judge's conclusion that “the record evidence decisively demonstrates that this merger would be beneficial to the employer-customers who obtain insurance services from Anthem and Cigna.”
- Anthem argued that if the merger is blocked, it would "limit access to high quality affordable care" and deny consumers upwards of $2 billion in annual medical cost savings.
After failing to demonstrate in District Court and in the Court of Appeals that the claimed efficiencies that the two companies hoped to generate would offset the harm the merger could have on competition in the health insurance market for national accounts, Anthem had been expected to call off its plans to acquire Cigna.
This is why the statement it released on the Court of Appeals' decision created some confusion as there is a slim chance that the Supreme Court would see the issue differently. "We are committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options," Anthem stated.
The Supreme Court has yet to say whether it will take the case. In the meantime, Anthem and Cigna have other legal matters to attend to. They each filed lawsuits against the other soon after the court decision that blocked the deal in February. Cigna is seeking more than $13 billion in damages on top of the $1.85 contractual breakup fee as well as an acknowledgement from Anthem that it has lawfully terminated the deal. Yet Anthem was granted a temporary restraining order against Cigna to keep it from leaving. Even though the contractual deadline (April 30) has passed, a hearing was set with the Delaware Court of Chancery for May 8 to discuss whether Cigna can actually end the merger plans like it has been attempting to do since February.
Anthem has fought long and hard to have its 2015 proposed acquisition go through – more so than Aetna and Humana as these two companies ended their $37 billion merger plan after it was also blocked in court on antitrust grounds. Both deals were challenged by the Department fo Justice (DOJ) in July 2016, which cited the potential for reduced competition, increased prices to consumers and dampened innovation efforts. Anthem and Cigna attempted to keep their disagreements on several aspects related to the merger a secret, but court documents showed that executives at the two companies had been accusing each other of breaching their contract.
Both companies then became more vocal about the issues they have had over the past year or so, with Anthem publishing a table that shows how reluctant Cigna has been throughout the approval process. Cigna has indicated that it has certain doubts about whether the combined company would actually be able to effectively implement the efficiencies that it would seek to generate. Anthem, however, admitted to putting together a team without Cigna's help that would seek to integrate the two companies. Why Anthem has been more adamant on having the deal go through remains unclear, though Q1 2017 earnings reports from Aetna and Humana show that the company that wants to make the purchase and fails to do so will suffer substantial financial losses.
Anthem's first quarter results, which were announced in April, show its operating revenue went from $20.3 billion in Q1 2016 to $22.3 billion. Cigna's results were released today and they show its revenue increased by 5%, totaling $10.4 billion. Its report also underscores the uncertainty surrounding the fate of the deal. Cigna is taking into account the possibility "that the expected synergies and value creation from the proposed merger will not be realized or will not be realized within the expected time period," and the "risk that the businesses of Cigna and Anthem will not be integrated successfully," among other possible scenarios.