UPDATED: Anthem terminates merger agreement with Cigna, won't pay break-up fee
Anthem accuses Cigna of sabotaging deal and says it will not pay the $1.8 billion break-up fee that was initially part of the agreement.
Cigna's headquarters in Bloomfield, Connecticut.
Anthem is ending its fight to merge with Cigna and will not pay the $1.8 billion breakup fee, the company announced Friday after the Delaware Court of Chancery denied Anthem's motion to keep Cigna in the deal.
"In light of yesterday's decision and Cigna's refusal to support the merger, however, Anthem has delivered to Cigna a notice terminating the merger agreement," Anthem said by statement. "Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee. On the contrary, Cigna's repeated willful breaches of the merger agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna.
Anthem said it has worked hard to complete the merger that was approved by over 99 percent of the votes cast by the shareholders of both companies.
"Anthem believed this acquisition was a truly compelling opportunity to positively impact the health and well-being of its members, and to expand access to high quality affordable health care for consumers," the company said."Anthem will remain focused on serving as America's valued health partner, delivering superior health care services to our more than 40 million members with greater value at less cost."
On Thursday, the Delaware court denied Anthem's request to keep Cigna in its expired $54 billion merger agreement.
The contract between the two insurance giants expired at the end of April. Anthem wanted to keep Cigna from ending the deal as it brought a request to the Supreme Court to review a lower court's decision barring the merger.
[Also: Anthem files petition to Supreme Court to review federal decision on failed Cigna merger]
In February, a federal court sided with the Department of Justice that the merger would decrease competition. Anthem had hoped for a different result under a new administration.
Cigna has been wanting out. During court proceedings, letters and emails between the insurers showed a bitter relationship. After the court ruled against the merger and Anthem's announcement of an appeal, Cigna brought a lawsuit in which it said the deal was over and it was entitled to $13 billion damages from Anthem as well as the agreed-upon breakup fee of $1.8 billion.
Anthem, in turn, successfully compelled the court to keep Cigna in the deal as the deal headed to appeal.
[Also: Anthem files motion to block Cigna from terminating $54 billion merger]
In a final stand, Anthem filed a petition with the Supreme Court requesting a review of the 3-1 appeals court decision that went against the merger.
Anthem has said its argument that a merger would be beneficial to employer customers was backed by one of the appeals court judges.
The Department of Justice brought the injunction against the merger in July 2016 over antitrust and anti-competitive concerns.
Twitter: @SusanJMorse
