Aetna and Humana Abandoned Their $37 Billion Deal of Combination
- Author: Rita Burton Feb 16, 2017,
Feb 16, 2017, 1:19
It says Anthem is not permitted to extend an April 30 termination date and is seeking a "reverse termination fee" of $1.85 billion and additional damages of up to $13 billion.
When Cigna and Anthem entered into this purchase agreement in August 2015, both companies expected it would take 18 months for the transaction to be completed.
Health insurer Anthem Inc said on Tuesday that Cigna Corp could not unilaterally terminate an agreement between the two companies to merge.
But the Department of Justice had sued last summer to stop the deals, due to concerns about how they may affect prices and consumer choices.
Since the announcement of the merger, shares of both Anthem and Cigna have underperformed the Zacks categorized Health Maintenance Organization industry by generating returns of 8.26% and 0.65% respectively compared with the sector's gain of 21.68%.More news: Sergio Ramos: A 'dream' to reach 500 games for Real Madrid
Another mega-merger between Anthem and Cigna was canceled several hours later, this one did not end as well.
The judge said the proposed merger between the two insurance companies would hurt competition.
Anthem is now appealing the judge's antitrust ruling, but it won't be easy to keep the deal alive, especially with Cigna trying to get away from it.
A federal judge ruled last week that the Anthem-Cigna merger would be anti-competitive, particularly for large, employer-based plans around the country. It was feared that the deals would further consolidate the already concentrated health insurance market which is dominated by a handful of players.
But in sharp contrast to the Anthem-Cigna fallout, Aetna and Humana leaders announced Tuesday they were disappointed they couldn't consummate their relationship, but thought the time had come to see other companies.
A spokeswoman for Anthem said following the judge's decision that the company was reviewing the judge's order, while Cigna issued a statement saying it "intends to carefully review the opinion and evaluate its options". Aetna shares rose 3 percent to $125.81, while Humana fell 0.4 percent to $205.97. Matthew Cantor, an antitrust attorney with Constantine Cannon, previously told Modern Healthcare that Anthem may argue that Cigna hasn't done enough to see the merger through and doesn't deserve the break-up payment.