- After years of discord between Anthem and Cigna over a failed $54 billion merger, a Delaware court ruled Monday that neither insurer can collect damages from the other. "Each must deal independently with the consequences of their costly and ill-fated attempt to merge," the court concluded in its opinion released Monday.
- After the 2015 deal soured, the two sued one other. Anthem alleged that Cigna breached its obligations under the merger deal and sought damages of $21.1 billion. Cigna accused Anthem of breaching its part of the planned agreement and wanted damages of $14.7 billion, plus a reverse termination fee of $1.8 billion.
- The court found that Cigna broke the part of the contract that required the parties to use best efforts to close the deal. However, the court also said Cigna proved the deal would have been blocked by the Department of Justice anyway. Still, Cigna failed to prove that Anthem violated certain covenants or that Anthem owed Cigna the reverse termination fee. The ruling was a wash — with neither insurer collecting damages they originally sought.
The court's 311-page decision is a page-turner, packed with drama as it pulls back the curtain on the behind-the-scenes battle for power between Anthem and Cigna's executive teams. Had the 2015 deal gone through, it would have created the nation's largest private health insurer.
But that is not what happened. The court's opinion details a play-by-play of the tension and discontent as plans over the final executive team helped unravel the blockbuster deal that was ultimately blocked by DOJ, which argued the deal would substantially lessen competition and harm millions of consumers across the country.
The court even calls the years-long dispute a "soap opera" in its Monday ruling.
"In this corporate soap opera, the members of executive teams at Anthem and Cigna played themselves. Their battle for power spanned multiple acts. Once the Cigna [executive leadership team] concluded that Anthem had the upper hand and would not make the concessions that Cigna wanted, the Cigna [executive leadership team] turned against the Merger," the court wrote.
Cigna CEO David Cordani soured on the deal when then Anthem CEO Joseph Swedish decided to push ahead on firming up the new company's leadership team. Cordani believed he was to serve as the new company's chief operating officer and then later succeed Swedish. But Cigna's leadership team was off put by Anthem as it believed it was a merger of equals, but Anthem began acting like the acquirer, angering Cigna, according to the ruling.
Over an email exchange, Swedish made clear that Cordani was not the only option as a potential successor for CEO. Swedish also sought to diminish Cordani's role in the new company. Cigna's leadership team perceived Swedish "to be launching a hostile takeover of Cigna" and later withdrew from integration planning process. The two became "increasingly adversarial" and the Cigna executive team turned "definitively against the Merger," according to the opinion.
And after DOJ filed suit against the deal, Cigna undermined Anthem's defense. "During his deposition and at trial, Cordani gave vivid testimony that was a boon to the DOJ," the opinion said. "It is clear that during the Antitrust Litigation, Cordani intentionally testified in a manner that would help the DOJ obtain a decision blocking the Merger."
Both Anthem and Cigna sought to claim victory in the statements sent to Healthcare Dive.
"We are pleased that the Court agreed with us that Cigna did not cause the merger to fail. We continue to strongly believe in the merits of our case, and we are evaluating our options with respect to appeal," the insurer said.
Anthem argued Monday's decision is in the best interest of Anthem and its stakeholders. "We are satisfied with the decision determining that Cigna breached its obligation to use best efforts to obtain regulatory approval for the merger, thereby eliminating its right to a $1.85 billion termination fee," Anthem said in a statement.
However, analysts at SVB Leerink said the ruling is a small positive for Anthem and a small negative for Cigna as the court ruled it breached its obligations.