Judge allows Cigna to walk away from US$48b merger with Anthem

WASHNGTON: Cigna Corp can walk away from its US$48 billion (RM208.51 billion) merger with Anthem Inc, a Delaware judge ruled almost three months after another court blocked the deal as anti-competitive.

The ruling on Thursday means Anthem could be on the hook for US$1.85 billion in breakup fees and US$13 billion in damages to Cigna, which had argued that its would-be partner was too stubborn to see that the concerns about competition were insurmountable.

Chancery judge Travis Laster said Anthem didn’t deserve a 60day extension to an earlier order barring Cigna’s exit because it was “incredibly unlikely,” the company could close the deal.

However, the judge said there was significant evidence Cigna might have violated the merger agreement by dragging its feet on antitrust concerns, which could entitle Anthem to “potentially massive damages.”

“The reality is both parties probably have some risk and they’ll bargain for something between zero and US$1.85 billion,” said Matt Cantor, an antitrust lawyer at Constantine Cannon.

Laster’s decision may be the final dagger to a deal that has been as notable for the bad blood between the two insurers as its antitrust roadblocks.

The decision makes it virtually impossible for Anthem to salvage the merger.

The company must either convince the nation’s highest court to overturn two lower court decisions finding the deal flawed or persuade new leadership at the Justice Department to drop its objections to the union.

Laster gave Anthem until Monday to decide whether to appeal his decision.

For Cigna, investors will watch whether the company uses its accumulated funds to repurchase shares or strike deals of its own.

“That’s the next big question,” she said. “I think they’ll end up being more acquisitive.”

Anthem was likely to pursue smaller deals, Gupte said, based on conversations with management. The firm could probably spend as much as US$6 billion, she said on Thursday. Bloomberg