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The fight will apparently go on. Health insurer Cigna said it will pull the plug on its planned merger with rival Anthem, following a judge’s decision that blocked the merger on antitrust grounds. At the same time, it launched a lawsuit against Anthem to seek a reverse $1.85bn termination fee and additional damages “in an amount exceeding $13bn.”

To which Anthem has responded – not so fast.

Cigna said in a statement that the damages it is seeking includes lost value to its shareholders as a result of Anthem’s alleged breach of their merger agreement – including lost deal premium, the missed upside opportunity from the hoped-for combined company and information about Cigna’s inner workings that Anthem gleaned through the deal process.

Cigna further elaborated in a statement that Anthem was obligated under the terms of the merger agreement to “use its reasonable best efforts to secure regulatory approval for the transaction and its obligation to refrain from misappropriating Cigna’s confidential information”.

It also accused Anthem of abandoning what it described as their an agreed-upon strategy to focus on the benefits that a combined company would bring to the health insurance marketplace – a strategy it hoped would win regulators’ blessing and assuage antitrust concerns. Instead, Cigna blamed Anthem for pursuing a “unilateral strategy” to bolster its Blue Cross Blue Shield network, which it said ultimately persuaded the judge that the deal would limit competition.

“As a result, the path for regulatory approval of the transaction was fatally compromised and Cigna and its shareholders were harmed,” Cigna said in a regulatory filing.

Anthem maintains that Cigna has no right to unilaterally pull the plug:

“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.”

Cigna said in a regulatory filing that it had reached out to Anthem in an attempt to resolve their differences over the merger agreement, but that they were unsuccessful in their efforts to reach a solution without litigation.

Last week, a federal judge ruled in favour of the US Justice Department’s lawsuit to block Cigna’s $48bn acquisition of its rival insurer, which followed close on the heels of another judge’s determination that another proposed health insurer mega-merger between Aetna and Humana was also anti-competitive.

Aetna said earlier on Tuesday that it would pay Humana a $1bn breakup fee after their proposed merger foundered in the wake of the court’s ruling.

Copyright The Financial Times Limited 2017. All rights reserved.
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