Cigna and Anthem in merger court battle
Cigna and Anthem traded accusations of harassment and sabotage in competing lawsuits as the two health companies feud publicly in the wake of a stalled $48bn merger.
Cigna accused Anthem of trying to undermine its business by stealing confidential information and harassing its customers. Anthem blamed Cigna for the deal’s failure, saying CE David Cordani had sabotaged the companies’ merger when Anthem rejected his demand to be made CE of the combined entity.
The Cigna complaint, filed in Delaware on February 14, exposes the deep rift between the two companies in their effort to win antitrust approval for the tie-up they struck in 2015. The clash contributed to a federal judge’s decision to block the merger earlier in February.
Cigna assailed Anthem’s conduct while the two companies were seeking regulatory approval of the deal, accusing it of using the pending merger for its own benefit and to hurt Cigna. Anthem’s actions led to the deal’s collapse when the US justice department sued to block it, Cigna said in the complaint made public on Friday.
“Anthem’s destructive conduct must … end,” Cigna said in the lawsuit, which seeks to recover a $1.85bn break-up fee and $13bn in damages.
Anthem had countersued Cigna to stop its competitor from terminating the agreement while Anthem pursues an appeal to overturn the court ruling blocking the merger. An appeals court in Washington set an expedited schedule on Friday to hear Anthem’s case. Arguments will be held on March 24.
Delaware chancery court judge Travis Laster on February 15 blocked Cigna from making any moves to scuttle the merger until he could decide whether it can legally pull out. Laster scheduled arguments on that issue for April 10.
Anthem’s complaint was also unsealed late on Friday. In it, the Indianapolis-based carrier said the merger agreement required both companies to appeal against a court order rejecting their tie-up and that Cigna could not terminate it.
The federal judge’s decision to block the merger on antitrust grounds did not kill the deal, Anthem said in the lawsuit.
A change of lawyers at the justice department with the Trump administration coming in may provide “a path forward”, according to the suit.
Anthem pointed the finger for the deal’s failure at Cordani.
Even after a deal was struck to make him president and chief operating officer of the combined company, Cordani had deemed it unsatisfactory, Anthem said. Cordani “disengaged from the merger process and embarked on an unprecedented campaign to sabotage the merger and procure a $1.85bn reverse break-up fee because Cordani wanted to remain in charge of Cigna and to take the break fee to grow a company he runs”.
In its suit, Cigna countered that Anthem “misappropriated” Cigna’s confidential information and told the market it would copy innovative components of Cigna’s business if the deal did not close. It also used discovery in the lawsuit as a “pretence” to harass Cigna’s customers by sending out subpoenas without advance notice to Cigna.