Dive Brief:
- A federal court official has backed the U.S. Department of Justice's request that Anthem and Cigna be required to release numerous letters between the proposed merger partners that reveal hostile communications and accusations breaches to their $48 billion merger agreement.
- Special master Richard Levie recommended to the federal judge overseeing the case to require the release of 12 documents and emails, as well as portions of 13 more. However, he found that numerous other documents requested by the DOJ lawyers are protected because of their focus on merger joint strategy.
- The case brought by the DOJ against the Anthem/Cigna merger is slated to go to trial in November.
Dive Insight:
The stakes around the release of the letters are massive, as Anthem has hinged part of its argument for the merger on the idea that by combining, the two companies would achieve "substantial efficiencies and other procompetitive effects."
However, the DOJ, which is challenging the merger on the grounds that it would be anti-competitive, argued for the release of the documents last month, suggesting the bickering between the two companies could impact their integration and joint operations.
“To the extent that the letters alleging breach reflect hostility between these individuals, such hostility may hamper these individuals’ ability to work together,” Levie wrote. "Similarly, to the extent that the letters suggest divergent opinions relating to each party’s conduct under the merger agreement, such disagreement also arguably indicates that the merged entity may not be able to bring forth the efficiencies that defendants promise."
Anthem stands to lose nearly $1.9 billion in fees to Cigna--which is said to no longer want the deal--if it is blocked over antitrust concerns. That is, unless it can show that Cigna has failed to uphold its end in supporting the merger.
The company has argued the documents are irrelevant, while Levie said they were relevant because "Anthem itself has placed the synergies into issue in this case." He noted that if the judge agreed with Anthem that the companies could overcome their disagreements, she could discount the documents.
It's not just Anthem and Cigna that have much at stake in the case. The entire industry will be watching to see over the coming months whether the megamerger goes through, as well as the proposed merger of giants Aetna and Humana, which would reduce the nation's "big five" health insurance companies down to three, effecting an extreme change to the current landscape.