Filing details tumultuous negotiations in Anthem-Cigna deal

Much like fellow merging insurers Aetna and Humana, Anthem and Cigna took part in a lengthy courting process before they announced they had struck a deal, the companies' latest Securities and Exchange Commission filing reveals.

Anthem announced in late July that it planned to acquire Cigna in a $54.2 billion deal--but not before the two companies sparred publicly over a previous takeover bid that Cigna rejected. The insurer's filing, part of the regulatory process to complete the deal, reveals more about how it all transpired. Here are some of the highlights:

  • Anthem CEO Joseph Swedish first contacted Cigna CEO David Cordani on May 6, 2014, to talk about the potential combination of the two companies.
  • Cordani informed Cigna's board of his discussions with Swedish on Sept. 24, 2014; Swedish did the same with Anthem's board Oct. 1.
  • During much of its negotiations with Anthem, Cigna also considered combinations with "Company A," likely UnitedHealth, and "Company B," likely Humana.
  • During a meeting in late February, the Anthem board of directors decided not to pursue a combination of Cigna, noting "there was no immediate rush to combine with Cigna at that time," but that it would wait and see how industry developments and pending Blue Cross Blue Shield Association antitrust litigation would unfold.
  • On May 20, after Humana turned down Anthem's a $230 per share offer to acquire it, Swedish decided to "aggressively re-engage with Cigna" about a deal. However, Cordani "noted that he and his team would need to understand the change in Anthem's position from several months ago," when the company had decided against a deal.
  • Throughout June, the Cigna board of directors wrangled with price, governance and leadership issues related to the potential deal with Anthem, issuing several counter-offers to the company. But Anthem grew impatient with Cigna's repeated rebuffs, and in late June decided to take their negotiations public.
  • Cigna responded with a harshly worded rebuke of Anthem's tactics. However, in early July Aetna and Humana announced they had struck a deal, so Cigna and Anthem's negotiations continued, finally resulting in an offer Cigna couldn't refuse.

Now that the companies have decided to combine, however, they still face a rigorous review from both federal and state regulators. Playing a considerable role in that review will be Katharine Wade, the insurance commissioner for Connecticut, where Cigna is based. Wade has embraced her role in the review, telling ABC News that she is going to make sure that if these two companies come together, there will be enough competition in the marketplace.

Yet her role also is controversial, as some officials have questioned whether Wade, a former Cigna vice president, should be part of the review process. While she has contended that she no longer owns Cigna stock and can conduct the review objectively, a recent Hartford Courant editorial calls for her to recuse herself.

To learn more:
- here's the filing (.pdf)
- read the ABC News article
- here's the Courant's editorial

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