Cigna is terminating the merger with Anthem after a federal judge blocked the deal on anti-competitive grounds.
Cigna is scrapping its plan to merge with rival Anthem, and is suing Anthem for $13 billion in damages because the deal couldn't get approved.
The health insurance company said it was terminating the merger with Anthem after a federal judge blocked the deal over anti-competitive grounds.
Anthem was attempting to appeal the judge's decision blocking the merger, even attempting a fast track of the appeal process.
Cigna claims that the $13 billion is to make up for "the lost premium value to Cigna's shareholders caused by Anthem's willful breaches of the Merger Agreement" and that the company was "disappointed in the outcome" of the merger process.
"Cigna believed from the outset that the merger of the two companies had the potential to expand choice, improve affordability and quality and further accelerate value-based care," the company said in a press release.
"Anthem contracted for and assumed full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy, under the merger agreement. Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process."
The merger would have made the combined company the largest health insurer in the US based on the number of lives covered.
A statement from a spokesperson at Anthem said that the terms of the agreement do not allow Cigna to back out of the merger and the company intends to follow through on the deal.
"On January 18, 2017, Anthem extended its Merger Agreement with Cigna through April 30, 2017," said the spokesperson. "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."
One of the factors in the decision by a federal judge to block the merger was Cigna's seeming trepidation with the deal during court proceedings. Transcripts of the proceedings released in November November showed that Cigna CEO David Cordani appeared unsure of the deal during testimony.
More to come...
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