$91B in combined deal value turns into $16B in fees, damages
February 15, 2017
Cigna (NYSE: CI) has announced plans to terminate its merger with Anthem (NYSE: ANTM) after a court ruling blocked the $54 billion deal last week. In addition to collecting a $1.85 billion breakup fee from Anthem, Cigna is suing for another $13 billion to recover the “premium that [its] shareholders did not realize as a result of the failed merger process.” A spokeswoman for Anthem has said Cigna does not have the right to terminate the agreement and is lobbying to extend it to the end of April, per The Wall Street Journal.
The lawsuit is the latest in an acrimonious integration process that undermined Anthem and Cigna’s claim that a combined entity would cut healthcare costs for consumers. When the news broke, Anthem’s share price fell nearly 3% before closing about where it opened Tuesday. Likewise, Cigna’s shares fell in the immediate aftermath before recovering to close slightly up.
News of Cigna’s suit came shortly after Tuesday’s announcement that Aetna (NYSE: AET) and Humana (NYSE: HUM) have decided to terminate their merger agreement after a court ruling similarly blocked the $37 billion deal late last month. Aetna will now pay Humana a $1 billion breakup fee and has terminated its plans to divest some of its assets to Molina Healthcare. Aetna shares closed up 3% on the news Tuesday.