Anthem-Cigna breaking: lawyers may talk, but Cigna gets to walk–and it continues in court

click to enlargeBreaking, with a whimper. This evening (11 May), the Delaware Court of Chancery released its ruling denying a 60-day injunction requested by Anthem to prevent Cigna from ending their merger. The original merger agreement had an end date of April 30. Judge Travis Laster stayed the implementation of his ruling until Monday noon to give Anthem a chance to appeal to the Delaware Supreme Court. Reuters

Is this The End? In this Editor’s opinion, yes, the petition to the US Supreme Court for a writ of certiorari notwithstanding. I stand by my Monday observation that “the Chancery Court decision to extend for 60 days–into July– is critical to any SCOTUS hearing, as it is unlikely there would be any merit in a review of a dead deal even if there is a potentially novel issue. 

So Cigna can walk, pass ‘go’ and collect…? The open issue is now Cigna’s. There is a contractually mandated breakup fee of $1.85 bn. In February, their Funny Valentine also claimed over $13 bn in damages, on the grounds that Anthem had intent to harm Cigna’s business. Not so fast though–there will certainly be a fight over the damages. According to Bloomberg, “the judge said there was significant evidence Cigna may have violated the merger agreement by dragging its feet on antitrust concerns, which could entitle Anthem to “potentially massive damages.” The next phase of court actions will be around damages awarded to Cigna, if any; if so how much; and what is the final settlement. Dirty laundry and ‘Who Shot John?’ will fly in this same court, unless the settlement is quick and quiet, highly unlikely with these two noisy protagonists. If it remains substantial, Cigna could be shopping for acquisitions–or be a cash-rich acquisition target itself. More distractions for management.

Other mergers may be more palatable in a changing healthcare landscape…just not this one. Also Fortune. Interested in the previous details? See our coverage here, including our take on ‘whither the policyholders (patients) and corporate buyers’.

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