WILMINGTON, Del. -- A judge here on Thursday freed health insurer Cigna Corp. to abandon its proposed $48 billion merger with Anthem Inc., declining to give Anthem more time to try to salvage the deal, which federal courts have blocked on antitrust grounds.
The development could spell the end for a long-troubled deal in which the two companies have accused one another of violating their merger agreement.
The Justice Department filed an antitrust lawsuit against the deal last year. A federal judge blocked the deal in February and an appeals court also ruled 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 have 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, at least for now.
Judge Laster in a Thursday afternoon hearing denied Anthem's injunction request, saying the company's chances of saving the merger were remote.
In a statement, Cigna confirmed the judge's decision and said, "We look forward to closing this final chapter." Anthem didn't immediately respond to a request for comment.
The judge stayed the ruling for 24 hours so Anthem can seek appellate review if it wishes.
During a lengthy court hearing on Monday, Anthem had argued to Judge Laster that Cigna had sabotaged the deal and shouldn't be able to kill the transaction while Anthem made one more push to save it.
Anthem said it had a realistic shot at overcoming antitrust hurdles, either through its Supreme Court appeal or perhaps through negotiations with Trump administration antitrust officials taking the reins at the Justice Department.
Cigna, for its part, had said the deal had no realistic legal path forward after federal court rulings found the merger would unlawfully suppress competition. And it disputed Anthem's allegations of sabotage.
While Cigna prevailed Thursday with the denial of injunction, Judge Laster made comments that could hurt the company down the line. He said Anthem may have a strong case that Cigna didn't live up to its contractual commitment to give its best efforts to fight for the deal.
The judge said Anthem at some point may have a chance to collect a large monetary damages award against Cigna.
"Money can't fix everything, but it can help a lot," the judge said in court. "At this point, in my view, a damages award is the only realistic form of relief."
A long and bitter legal road could lie ahead as each side accuses the other of violating the deal's terms and seeks a big payout in damages. Cigna wants a $1.85 billion breakup fee from Anthem, as called for in the merger agreement, plus more than $13 billion in damages.
Anthem argues that Cigna isn't entitled to the breakup fee and it is seeking an unspecified amount of damages "for all forms of loss" that it alleges were caused by Cigna.
The federal antitrust trial on the merger was the most unusual in recent memory. Acrimony between the companies already was high by the time the Justice Department's case against the merger went to trial last November.
Anthem mounted a legal defense of the merger largely alone, with Cigna lawyers saying little in court. On the rare occasions when the Cigna team did speak, it usually didn't help Anthem's position.
When U.S. District Judge Amy Berman Jackson blocked the deal in February, she said the proposed merger would create an unacceptable reduction in the number of companies able to serve large multistate employers that insure their workers.
She also called the companies' rift "the elephant in the courtroom," saying she couldn't "properly ignore the remarkable circumstances that have unfolded both before and during the trial."
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(END) Dow Jones Newswires
May 11, 2017 18:45 ET (22:45 GMT)