Health insurer Cigna Corp. on Tuesday announced it had terminated its merger agreement with Anthem Inc. and had filed a lawsuit seeking more than $13 billion in damages from the company.
The move comes less than a week after a federal judge ruled in favor of the U.S. Department of Justice and 11 states in a civil antitrust suit to block the acquisition. The court said the proposed $54 billion merger between Indianapolis-based Anthem, which runs its California operations from Thousand Oaks, and Cigna in Bloomfield, Conn. would have “stifled competition,” thereby increasing health insurance prices and slowing innovation aimed at reducing costs.
Now, Cigna has filed a suit against Anthem in the Delaware Court of Chancery to enact the termination, including the payment of a $1.85 billion reverse termination fee. Cigna also is looking to recover $13 billion in damages, including the amount of premium unrealized by shareholders as a result of the failed transaction.
“This action is necessary to enforce and preserve Cigna’s rights and protect the interest of its shareholders,” the company said in a prepared statement. “Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the entire process.”
In response, Anthem maintained that Cigna has no authority to kill the merger agreement, as it had already asserted its right to extend the termination deadline until April 30. An Anthem spokeswoman on Tuesday told the Wall Street Journal that the company would “continue to enforce its rights under the merger agreement” and remains committed to closing the deal.