Hours after Aetna and Humana amicably terminated their $37 billion merger, Cigna broke off its planned $54 billion takeover by Anthem. Cigna also sued to collect a $1.85 billion termination fee and asked for more than $13 billion in additional damages.
Both breakups occurred on Valentine’s Day.
This messy divorce comes less than a week after a federal judge in Washington, D.C., blocked Anthem’s proposed acquisition of Cigna, citing antitrust law. Indianapolis-based Anthem had said that it would appeal the ruling.
“In light of the court’s ruling, Cigna believes that the transaction cannot and will not achieve regulatory approval and that terminating the agreement is in the best interest of Cigna’s shareholders,” the target company said in a press release.
Under terms of the now-failed agreement, Cigna, of Bloomfield, Connecticut, is entitled to a $1.85 billion breakup fee. A suit filed in the Delaware Chancery Court Tuesday asked for that money, as well as additional damages “in an amount exceeding $13 billion,” Cigna said.
“These additional damages include the amount of premium that Cigna shareholders did not realize as a result of the failed merger process,” the statement said.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“This action is necessary to enforce and preserve Cigna’s rights and protect the interests of its shareholders. The company believes strongly in the merits of its case and hopes that this matter is rapidly resolved.”
Anthem seems to dispute the “rights” part of that assertion. In an emailed statement, Anthem said that the two companies last month extended the deadline to consummate their merger until April 30.
“Under the terms of the merger agreement, Cigna does not have a right to terminate the agreement. Therefore, Cigna’s purported termination of the merger agreement is invalid. Anthem will continue to enforce its rights under the merger agreement and remains committed to closing the transaction,” the statement said.
Given the federal court’s ruling and the new lawsuit, it seems highly unlikely that the transaction will close as intended.
Photo: Flickr user Rachel Ost
