After a judge ruled that Cigna can walk away from its long-troubled tie-up with Anthem, the larger insurer officially called off the deal. But Anthem also made clear it has no intention of paying a $1.85 billion breakup fee.
On Thursday, the Delaware Chancery Court denied Anthem's request for a preliminary injunction to keep Cigna from exiting their merger agreement, Anthem confirmed in a statement. In light of that decision, "Anthem has delivered to Cigna a notice terminating the merger agreement," the company said.
In an earlier statement emailed to FierceHealthcare before Anthem made its announcement, a Cigna spokesman wrote that "we look forward to closing this final chapter."
During a hearing Thursday about the injunction, Vice Chancellor Travis Laster acknowledged that his decision would let Cigna exit the deal and “effectively end Anthem's path to closing,” according to Reuters. However, he had given Anthem until noon on Monday to decide whether to pursue an appeal to the Delaware Supreme Court.
In February, a federal judge blocked the insurers’ deal, ruling that it violates antitrust law. Shortly after, Cigna sued Anthem, seeking to end their merger agreement and asking for more than $14 billion in damages.
In response, Anthem filed, and was granted, a temporary restraining order to keep Cigna in the contract while it pursued an appeal of the judge’s ruling. But when that appeal failed, the insurer sought a 60-day extension to keep Cigna in their contract while Anthem attempted to appeal the case to the U.S. Supreme Court.
Laster ultimately decided that Anthem didn’t deserve an extension because it’s “incredibly unlikely” that it would be successful in its bid to save the merger, Bloomberg reported.
Anthem and Cigna now must battle it out over the $1.85 billion breakup fee associated with their contract. Anthem said in its statement that it should not have to pay the fee, as "Cigna has failed to perform and comply in all material respects with its contractual obligations."
"Cigna’s repeated willful breaches of the merger agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna," the statement added.
In fact, the companies have been at odds throughout the process of trying to get their deal approved. Anthem CEO Joseph Swedish even testified during their antitrust trial that once Cigna stopped cooperating with its integration efforts, his company established a secret team to complete the task without Cigna’s input.
In addition, Cigna at one point even cross-examined Anthem’s own expert during the trial, the presiding judge noted in her opinion.
For Laster’s part, he said Anthem could be entitled to “potentially massive damages” given the evidence that Cigna may have violated their merger agreement, according to the Bloomberg article.
Either way, Cigna could now be in a position to jump back into the merger game, analysts have said. One prime acquisition target could be Humana, given its strong presence in the Medicare Advantage market.
Editor's note: This article was updated after Anthem released a statement confirming it would end its merger agreement with Cigna.