Anthem to Cigna: That’s Sabotage! You’re staying, like it or not! (updated 21 Feb)

Breaking News in The War of the Payers. Late on Wednesday (15 Feb), Anthem received a temporary restraining order to block Cigna from terminating the merger. Judge Travis Laster’s decision in the Delaware Court of Chancery maintains the “legal status quo’ until an April 10 hearing, where he will hear arguments from both sides. Anthem is now able to proceed with a fast-tracked appeal in the DC Federal Court of Appeals to overturn the February 8 DC District Federal Court decision that denied the merger. The sole extension in the merger agreement is to April 30, which will be preceded by the Chancery Court hearing 20 days prior. Bloomberg, WSJ (via 4-traders.com)

Wednesday morning, Anthem had filed a temporary restraining order in Chancery Court to keep Cigna from ankling the merger, which would make an appeal moot. It was positioned in their February 15 release as “a temporary restraining order to enjoin Cigna from terminating, and taking any action contrary to the terms of, the Merger Agreement, specific performance compelling Cigna to comply with the Merger Agreement and damages.” Cigna wanted out immediately, as we noted on Feb 14, seeing no hope in challenging the District of Columbia Federal District Court ruling as Anthem does, and took the position that the extension was invalid. They also sought an additional $13 billion in damages for shareholders beyond the $1.85 billion breakup fee.

The language Anthem used in Wednesday’s release to justify the filing was harsh: “…Cigna does not have a right to terminate the Merger Agreement at all because it has failed to perform fully its obligations in a manner that has proximately caused or resulted in the failure of the merger to have been consummated.” Anthem then accused Cigna of actively working to sabotage the merger: “Cigna’s lawsuit and purported termination is the next step in Cigna’s campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the Merger Agreement in support of such effort.”Also Forbes

Bottom line: ‘Cigna, you’re a bad and faithless partner, but we are going to force a merger by any means possible anyway.’ Cigna blames Anthem for botching the merger approvals. Does prolonging any of this make sense?

Updated 21 Feb The differences started at the very beginning, with C-level disputes on who would lead a merged company and other areas of governance, so obvious (and public) they were cited by DC Federal District Judge Amy Berman Jackson’s Feb. 8 decision. David Balto, an antitrust lawyer in Washington, dubbed it ‘a shotgun marriage that went sour’ and not to discount Cigna’s case for damages due to business harm. After reading this article, you’ll wonder why they even started. Hartford Courant

Analysis Any merger between Anthem and Cigna has become, despite the language, a hostile takeover, worthy of Frank Lorenzo in this Editor’s airline days, or more recently, Carl Icahn. Having worked for Mr Lorenzo years ago, observing from my tiny chair way over on the sidelines, I learned that hostile takeovers and poorly thought-out mergers don’t work out well, in service delivery or economics, short or long term. They usually end badly, in bankruptcy court, with many tears shed and lives wrecked.

Memo to Anthem and Cigna–is this really necessary? Here we are dealing with insurance, and service to policyholders/members, affecting both their health and wealth. You both talk a good game about saving on medical costs, accelerating the progress of value-based care, delivering value to shareholders, and improving quality. But you hate each other and have from the start. Playing the game of Who Blinks First, and the distraction of a long and bitter legal battle, cannot be anything other than harmful to your members, employees, doctor and health system providers, your bottom lines, and your future.

This is not the airline business, beverages or detergent. It’s people’s lives here–have you both forgotten? Enough! Stop now! Get back to the business of healthcare!

Previously and related in TTA: Cigna to Anthem: we’re calling it off too, Aetna’s Bertolini to Humana: let’s call the whole thing off, Anthem-Cigna merger nixed

Anthem-Cigna merger nixed, finally (US)

click to enlarge Breaking News. Not with a bang, but a whimper. Late Wednesday 8 Feb, the anticipated decision derailing the $54 million Anthem-Cigna merger was released by the Federal District Court, District of Columbia. Judge Amy Berman Jackson’s decision denying the merger was very much along the anti-competitive and anti-trust rationales contained in the 19 January advance report by the New York Post. There’s little that hasn’t already been explored in our prior reports, so we will leave the rehashing to sources like CNBC. The general consensus is that the four Big Payer Merger participants (Aetna and Humana merger denied [TTA 24 Jan]) will be moving on, perhaps to their advantage as most of the premises for merging, based on ACA’s effects, are expected to change, drastically.

Cigna must also be relieved after its reported ‘merger remorse’ after too many rumored disagreements with Anthem. According to Bloomberg, Cigna is sitting on $7 to $14 billion deployable capital, with the high end including extra debt. (Does this include the $1.85 bn breakup fee that Anthem owes to Cigna? Stay tuned on how Anthem tries to get out of this.) And the American Medical Association is beyond delighted (release).

Of course, there’s a lot of speculation about all that loose cash being deployed on new merger targets, which include the Usual Suspects of Humana, WellCare, Centene and Molina. Some free advice: all these companies should, for the next year, sit quietly and breathe deeply (as many employees who would be redundant in any merger are). They should also take care of business (TCB!), refocus on serving their policyholders, make their processes far less onerous on providers, and let it all shake out rather than rushing out to find out Who To Buy. (New Attorney General Jeff Sessions was sworn in this morning, and many changes are coming in both healthcare policy and the judiciary.) Also Neil Versel’s pointed take in MedCityNews.