Highmark's $475 million acquisition of West Penn Allegheny Health System has been canceled.
WPAHS on Friday claimed that Highmark breached the affiliation agreement by demanding it enter bankruptcy so the insurer could gauge reaction from the market and its own bondholders before finalizing the deal, the Pittsburgh Post-Gazette reported.
"To us, bankruptcy is not the first option; it's the last option," WPAHS board chairman Jack Isherwood said in a statement. He added that filing for bankruptcy would harm the health system, its employees and the community, WPXI reported. What's more, WPAHS said its debt hasn't increased since it signed the affiliation agreement with Highmark in June 2011.
Highmark has said that WPAHS's estimated $800 million debt is a "key financial hurdle to finalizing the affiliation," the Pittsburgh Business Times reported. However, the insurer said it "categorically denies" that it breached the affiliation agreement.
"We have been working in good faith with WPAHS to move forward our proposed affiliation in a way that creates a strong foundation for success," according to Highmark's statement. "We believe that we have made substantial progress in this regard, especially in recent weeks."