After the Delaware Court of Chancery denied Anthem’s request for a temporary restraining order to halt Cigna from ending the proposed merger of the two insurance giants, Anthem announced it was terminating its agreement with Cigna, according to a press release. AMA called the termination a “clear victory.”
Since the deal was announced in July 2015, AMA and the American Hospital Association, as well as many other health and medical associations and regulators have vigorously opposed and widely advocated against the merger, condemning it as harmful to patients and the nation’s health system.
The termination of the merger will preserve competition in the health care industry, according to AMA.
“To the detriment of patients, there is already far too little competition among insurers,” Andrew W. Gurman, MD, president of AMA, said in a release. “Networks are already too narrow, and premiums are already too high. Competition, not consolidation, is the right prescription for health insurance markets.”
“Following 21 months of advocacy before the U.S. Department of Justice, congressional committees, state attorneys general, insurance commissioners, and federal courts, the break-up of the Anthem-Cigna mega merger deal shows again that when doctors join together, the best outcome for patients and doctors can be achieved,” he added.
Anthem and Cigna have issued separate press releases on the termination of the merger.
“Anthem was required under the merger agreement to lead the regulatory approval process and to use its reasonable best efforts to obtain regulatory approval,” according to Cigna. “As Cigna has stated, it believes that Anthem willfully breached those obligations and as a result the transaction did not receive the requisite regulatory approvals.”
As a result of the merger termination, Cigna plans to promptly increase the open market share repurchase activity, according to the release. Share repurchase of $3.7 billion was previously authorized by Cigna’s Board of Directors, according to the release. Approximately 2.4 million shares of common stock for approximately $360 million has been repurchased by Cigna through May 11, 2017, and at least half of the remaining authorization is expected to be repurchased by Cigna by the end of 2017, according to the release.
According to Anthem, “Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee. On the contrary, Cigna’s repeated willful breaches of the Merger Agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna.”
Disclosure: Healio Internal Medicine was unable to confirm relevant financial disclosures at the time of publication.