Though Anthem doesn’t want to pay a termination fee after ending its bid to buy Cigna, the smaller health insurer is still seeking that sum plus damages—ensuring that the companies’ legal battle will outlast their doomed transaction.
Anthem officially called off the two insurers’ deal on Friday after a Delaware court denied its injunction that sought to keep Cigna from exiting their merger agreement. Anthem was hoping to keep Cigna on board for one last push to save the merger, as it had petitioned the Supreme Court to review the case. In February, a federal judge blocked the merger, and an appeals court later upheld that ruling.
In its announcement Friday, Anthem said Cigna “failed to perform and comply in all material respects with its contractual obligations” related to the deal, so it was not entitled to the $1.85 billion breakup fee outlined in the insurers’ contract.
But Cigna, of course, doesn’t see it that way. In a statement released later Friday, it said Anthem “willfully breached” its obligations to do what was necessary to ensure the deal achieved regulatory approval. The statement didn’t detail what Cigna believes Anthem did to breach their merger agreement, but a previously released Q&A document offers hints about the rationale.
Cigna, the company said, agreed to the deal “in order to create a combined company that would expand choice, improve affordability and quality and further accelerate value-based care.”
However, the document said that “Anthem abandoned this agreed-upon plan and instead pursued a unilateral strategy that heavily favored the Blue Cross Blue Shield Association, members and rules over the transaction and its obligations under the merger agreement.”
Therefore, Cigna said Friday that it’s seeking prompt payment of the $1.85 billion reverse termination fee and will pursue its previously filed claims for additional damages of more than $13 billion against Anthem “for the harm that it caused Cigna and its shareholders,” the company said.
However, Anthem on Friday reiterated its accusation that Cigna sabotaged their deal, and said because that caused it to suffer “massive damages,” it plans to vigorously pursue those claims against Cigna. Anthem has said that it made every effort to maintain regulatory clearance, accusing its acquisition target of thwarting those efforts every step of the way.