The ruling on Thursday means Anthem could be on the hook for $1.85 billion in breakup fees and $13 billion in damages to Cigna, which had argued that its would-be partner was too stubborn to see that the concerns about competition were insurmountable.
Delaware Chancery Judge Travis Laster said Anthem didn’t deserve a 60-day extension to an earlier order barring Cigna’s exit because it was “incredibly unlikely,” the company could close the deal. However, the judge said there was significant evidence Cigna may have violated the merger agreement by dragging its feet on antitrust concerns, which could entitle Anthem to “potentially massive damages.”
“The reality is both parties probably have some risk and they’ll bargain for something between zero and $1.85 billion,” said Matt Cantor, an antitrust lawyer at Constantine Cannon.
Laster’s decision may be the final dagger to a deal that has been as notable for the bad blood between the two insurers as its antitrust roadblocks. Anthem is asking the U.S. Supreme Court to overturn rulings finding the deal flawed by antitrust problems, and the court is unlikely to weigh in now that Cigna has been allowed to walk.
Matthew Asensio, a Cigna spokesman, and Bonnie Jacobs, an Anthem spokeswoman, had no immediate comment on the ruling.
The decision makes it virtually impossible for Anthem to salvage the merger. The company must either convince the nation’s highest court to overturn two lower court decisions finding the deal flawed or persuade new leadership at the Justice Department to drop its objections to the union. President Donald Trump has been seen as more friendly to deal-making than the Obama administration, which blocked the Cigna takeover as well as the tie-up of Aetna Inc. and Humana Inc.
Laster gave Anthem until Monday to decide whether to appeal his decision.
Ana Gupte, an analyst at Leerink Partners, said Anthem’s ongoing legal battles were about negotiating over the breakup fee, and it’s not a surprise the company lost. For Cigna, investors will watch whether the company uses its accumulated funds to repurchase shares or strike deals of its own.