Anthem Inc. on Friday accused Cigna Corp. of undermining the companies’ merger agreement and implied that legal action is imminent.
Anthem said in a statement that it has given Cigna a merger agreement termination notice.
“Cigna has failed to perform and comply in all material respects with its contractual obligations,” Anthem said. “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.”
Cigna responded by announcing that it will seek payment of a $1.85 billion deal termination fee from Anthem, and that it will pursue claims for more than $13 billion in additional damages. Anthem owes Cigna the additional damages “for the harm it caused Cigna and its shareholders,” Cigna said.
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In the same announcement, Cigna said it will spend at least about $1.6 billion on buying back its own stock between now and the end of the year as a result of the termination of the Anthem-Cigna transaction.
Indianapolis-based Anthem and Bloomfield, Connecticut-based Cigna announced the $48 billion agreement in July 2015, after months of press reports about Anthem pursuing Cigna.
Anthem predicted when the deal was announced that the combined company would have the clout it needed to do a better job of managing care and negotiating affordable prices with big, for-profit hospital companies and other health care providers.
The American Medical Association and hospital groups opposed the deal, saying it would give the combined company too much market clout.
Federal antitrust regulators sided with the providers and fought the deal.
In February, a judge at the U.S. District Court for the District of Columbia ruled in favor of the antitrust regulators.