Business

Cigna terminates $48bn Anthem deal, demands $14.85bn compensation

Cigna terminates $48bn Anthem deal, demands $14.85bn compensation

Health insurers Aetna Inc and Humana Inc walked away from their $34 billion merger on Tuesday and Cigna Corp sought to end its deal with Anthem, shelving the industry consolidation they charted to address former President Barack Obama's Affordable Care Act.

Aetna Chairman and CEO Mark Bertolini said in a company release Tuesday that "the current environment makes it too challenging to continue pursuing the transaction".

Meanwhile, Aetna and Humana both released statements saying the two companies chose to mutually end their merger. The deadline for Anthem to save its Cigna deal is April 30, or it must pay Cigna a $1.85 billion breakup fee.

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".

Tensions between Cigna and Anthem have been evident since before the Justice Department sued in July to stop the merger, which the government said would reduce competition and reduce choice for consumers.

Cigna said Tuesday it is rejecting Anthem's proposed $48 billion acquisition bid and suing the insurer.

Cigna said it was disappointed in the outcome of planned merger.


Humana also announced that 2017 would be the past year in which the company will offer individual commercial medical coverage, and it will service members in the 11 states where it is now active. The proposed merger between health insurers Anthem and Cigna also was blocked by a judge.

The messy divorce between Anthem and Cigna took another turn Wednesday in a DE court that will be the scene of further expensive legal battling over the insurers' merger attempt.

"Therefore, Cigna's purported termination of the merger agreement is invalid", it said. Anthem said it remains committed to closing the deal.

"Medicare Advantage plans are privately run but reimbursed by Medicare".

The suit also blasts Cigna, accusing it of repeated efforts to sabbotage ther transaction, a deal Anthem says would be a huge win for consumers and shareholders. The decision was taken following a "no" from the federal court with respect to their deals.

U.S. District Judge John Bates wrote in the decision last month that neither new competition nor plans to shed some of the combined company's businesses would be enough to ease antitrust concerns.