No Compensation for Anthem and Cigna’s Failed $54 Billion Merger

Neither company will receive billions sought in damages after the failure of what might have been a historic merger.

A Delaware judge ruled on Monday that neither Anthem Inc. nor Cigna Corp. can receive damages in the fallout from their failed 2015 merger, ending a years-long legal battle that he referred to as a “corporate soap opera”.

“Neither side can recover from the other. Each must deal independently with the consequences of their costly and ill-fated attempt to merge,” wrote Vice Chancellor J Travis Laster in his decision.

Anthem and Cigna originally struck the merger deal in 2015, wherein Anthem, which manages several Blue Shield and Blue Cross affiliates, planned to buy Cigna for over $54 billion. If successful, the merger would have created the largest health insurance provider in the US.

However, divisions sprouted regarding Cigna CEO David Cordani’s role in the new company. Originally slated to begin as President and COO of the company before succeeding to the CEO position after Anthem’s Joseph Swedish. During organisational planning, Cordani’s role was broadened and no clear path of succession was left, according to court documents.

The merger was eventually blocked by the DOJ in 2017 over antitrust issues, and Cigna sued Anthem to terminate the merger agreement. Anthem filed a suit of its own to continue the merger. Once the merger was ruled against by a Delaware appeals court, Anthem gave up the deal but refused to pay Cigna the $1.85 billion breakup fee that the company was seeking, or a further $13 billion in damages for losses to shareholders.

Anthem then sought $21 billion from Cigna, claiming that it deliberately sunk the deal by refusing to push back against opposition by the DOJ.

“Although Anthem proved that Cigna breached the [merger] efforts covenants, Anthem failed to prove that Cigna’s breaches led to causally related damages,” Laster wrote, also noting that Cigna’s opposition to the deal was clear throughout the saga. “Each party must bear the losses it suffered as a result of their star-crossed venture.”

An Anthem spokesperson wrote in an emailed statement that the company was happy with the decision to strike down the $1.85 billion breakup fee. “We believe this decision is in the best interests of Anthem and our stakeholders,” they wrote.

In a Monday statement, Cigna said that it was pleased by the finding that the company did not cause the merger to fail. “We continue to strongly believe in the merits of our case, and we are evaluating our options with respect to appeal,” Cigna said.

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