Shareholder sues over 'doomed' Anthem-Cigna transaction
- A shareholder claims that Anthem's acquisition of Cigna was "doomed" to fail and points the finger at the company's top executives and board members in a lawsuit filed last week in Marion Superior Court in Indiana.
- Shareholder Henry Bittmann alleges Anthem officials ignored red flags over antitrust concerns and restrictions it faced from its membership in the Blue Cross Blue Shield Association. Ignoring those concerns ultimately led to the deal being blocked, the lawsuit claims.
- Anthem's own analysis was that the merger faced an "insurmountable barrier to doing the transaction," yet Anthem continued to negotiate with Cigna throughout 2014 and into 2015, according to court documents.
The pressure to consolidate propelled Anthem's quest to acquire Cigna because the former was fearful of getting left behind as the rest of the industry rapidly consolidated, the lawsuit claims.
"We intend to vigorously defend this lawsuit; however, its ultimate outcome cannot be presently determined," Anthem said in a recent regulatory filing.
Unlike in 2017, both of this year's blockbuster deals — CVS-Aetna and Cigna-Express Scripts — gained antitrust approval at the federal level and are sure to dramatically change the landscape of healthcare.
Cigna is close to closing its bid to acquire Express Scripts, and CVS takeover of Aetna is expected to be complete by the year's end.
But just last year, Aetna's bid for Humana was blocked by the Department of Justice, along with Anthem's bid for Cigna.
Despite the recent shareholder lawsuit and the battle to unwind its failed merger with Cigna, Anthem's competitors have quickly moved on to other deals. And it was the rumor of rapid consolidation that led Anthem's efforts, albeit shortsighted, the lawsuit claims.
After shelving a first round of merger talks in March 2015, rumors began swirling that Humana and Aetna were in talks about merging. This set off a frenzy of bids between the nation's largest insurers, the lawsuit alleges, and by May 2015 former Anthem CEO Joe Swedish set his sights on Cigna again.
Bittmann alleges Anthem and its officers talked little about the potential antitrust litigation and the laws governing the Blues.
"Anthem made many other assurances to Cigna and to the government to try to sell the idea of the Merger to them. But in reality, the Officer Defendants were well aware that their rosy picture was a sham because of wide resistance to the Merger by the Blues, and because they intended, all along, for Anthem to swallow, and then sideline, Cigna to eliminate a competitor, in violation of the antitrust laws," the lawsuit alleges.