Anthem asks judge to continue blocking Cigna's merger exit

May 8, 2017

Anthem Inc. is making another push to salvage its $48 billion merger with Cigna Corp. by asking a Delaware judge to extend an order blocking its would-be partner from pulling out of the deal.

Indianapolis-based Anthem wants Delaware Chancery Court Judge Travis Laster to extend a temporary ban on Cigna’s exit for 60 days. The company hopes to work out a deal with federal prosecutors to drop their objections to the combination or to get the U.S. Supreme Court to overturn court rulings blocking it as anticompetitive.

Laster said during a hearing Monday that it’s a “long shot” that Anthem can find a path to success after two federal courts found the merger was crippled by antitrust problems. He said he’d rule later on Anthem’s request to get more time to rescue the combination.

Anthem is seeking to breathe new life into a deal that has been as notable for the bad blood between the two insurers as its antitrust roadblocks.

The company has accused Cigna of seeking to sabotage the merger by dragging its feet on divesting business lines that raised antitrust issues. Cigna says Anthem refuses to acknowledge that anticompetitive issues have sunk the deal in an attempt to gain advantage in the health-insurance market.

Bloomfield, Connecticut-based Cigna announced plans to terminate the merger in February and filed suit in Delaware seeking to collect a $1.85 billion breakup fee and $13 billion in damages from Anthem. That prompted Anthem to countersue in the same court to keep the merger alive.

“We have a pretty clear case that Cigna doesn’t have a right to terminate this transaction,’’ Glenn Kurtz, one of Anthem’s lawyers, told the judge.

‘Near impossibility’

William Savitt, an attorney for Cigna, countered that it’s “a near impossibility” that Anthem could get the deal done in 60 days. It’s likely the U.S. Supreme Court won’t even consider its appeal petition until September, he said.

Savitt also dismissed claims that selling off businesses would have addressed the U.S. Justice Department’s antitrust qualms, saying that no “divestiture package would have solved” the merger’s problems.

Anthem officials are hoping to persuade new regulators appointed by President Donald Trump to withdraw antitrust objections leveled by former President Barack Obama’s Justice Department. That would mean federal court rulings based on the government’s anticompetitive concerns would no longer block the deal from proceeding.

Makan Delrahim, Trump’s pick to lead the Justice Department’s antitrust division, worked as a lobbyist for Anthem last year in its effort to merge with Cigna. He would recuse himself from any settlement decisions if confirmed by the Senate.

The Anthem-Cigna merger is one of two insurer tie-ups that were blocked following challenges by the Justice Department last year. The otherbetween Aetna Inc. and Humana Inc.was abandoned by the companies in February after they decided against an appeal.

If the merger falls through, Anthem would be in line to recover “big damages” from Cigna over its failure to use its best efforts to get the combination done, Kurtz told Laster. The judge may be called on to decide that issue later.


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