Anthem Ends Cigna Pursuit, Plans to Seek Damages -- 2nd Update
Anthem Inc. on Friday terminated its long-troubled merger agreement with Cigna Corp., adding that it wouldn't pay a termination fee and promised to "vigorously pursue" damages claims against the insurer.
The statements come a day after a Delaware judge said Cigna could abandon its proposed $48 billion merger with Anthem, declining to give Anthem more time to salvage a deal federal courts had already blocked on antitrust grounds.
Anthem said Cigna isn't entitled to a $1.85 billion termination fee because it "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," according to a statement.
In addition to the breakup fee, Cigna plans to seek damages of more than $13 billion from Anthem. In a statement, Cigna said it "has a clear path to create value in the marketplace" now that the merger is dead. The company also said it plans to increase share repurchase activity.
The deal has been on the rocks for several months with both companies accusing one another of violating the merger agreement.
The Justice Department filed a lawsuit to block the merger last year amid concerns the combination would substantially lessen competition in insurance markets around the country.
A federal judge blocked the deal in February and an appeals court upheld the decision against Anthem last month. But Anthem sought to press forward and recently asked the U.S. Supreme Court to intervene, a request that faced long odds.
Separate from the federal antitrust case, Anthem and Cigna sued one another in Delaware, and Anthem wanted Vice Chancellor J. Travis Laster, a judge on the Delaware Chancery Court, to issue an injunction that would have prevented Cigna from terminating the deal.
Judge Laster in a Thursday afternoon hearing denied Anthem's injunction request, saying the company's chances of saving the merger were remote.
However, the judge also said Anthem may have a strong case that Cigna didn't live up to its commitment to try to preserve the tie-up. The judge said Anthem at some point may have a chance to collect a large monetary damages award against Cigna.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 12, 2017 16:34 ET (20:34 GMT)