Cigna Files Lawsuit Against Anthem After Judge Blocks Merger

Cigna said Tuesday that it filed a lawsuit against Anthem seeking more than $13 billion in damages to its shareholders and a $1.85 billion breakup fee.

Cigna sued Anthem in Delaware's Chancery Court for a declaratory judgment that it had legally terminated the agreement and that Anthem couldn't extend the termination date for the transaction. There's also a $1.8 billion breakup fee that Cigna's owed in the event this ruling is final.

More than one and a half years of courtship between Anthem Inc.

Anthem's lawsuit, which was also filed in DE, seeks a temporary restraining order to prevent Cigna from ending the deal, arguing there is still enough time to complete the transaction first announced in July 2015.

Humana executives on Tuesday hinted that the failed 19-month process to be swallowed by Aetna had soured their appetite for another prolonged megamerger. Then, later in the day, Cigna said it is suing Anthem to kill a $48 billion acquisition bid.

Bloomfield, Connecticut-based Cigna was apparently disappointed in the outcome, and believes the deal has no chance of achieving regulatory approval, despite Anthem's announcement of an appeal. A federal judge has rejected health insurer Aetna's plan to buy rival Humana for about $34 billion and become a major player in the market for Medicare Advantage coverage.

David Balto, an antitrust attorney in Washington, warned that even if the appeals court were to reverse Jackson's ruling and allow the deal to go through, the animosity between the two parties could be unsafe for the combined company.

Had they gone ahead, the insurance industry would have been dominated by three giants, as opposed to five companies. Cigna also announced that its board of directors has expanded its share repurchase authority to an aggregate amount of $3.7 billion. The other - between Aetna Inc. and Humana Inc. - was abandoned by the companies on Tuesday after they decided against an appeal.

The messy divorce between Anthem and Cigna took another turn Wednesday in a DE court that will be the scene of further expensive legal battling over the insurers' merger attempt. Aetna was up about 2 percent.

Anthem is by far Virginia's largest health insurer, covering almost 3 million residents under the Blue Cross-Blue Shield name.

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