By Caroline Humer
Health insurers Aetna Inc and Humana Inc walked away from their $34 billion merger deal on Tuesday, while Cigna Corp announced that it was seeking to end its deal with Anthem.Both deals were announced in July 2015, and the Justice Department filed a lawsuit a year later saying they were illegal under antitrust law. Federal judges hearing the cases ruled against Aetna's acquisition of Humana on Jan. 23 and Anthem's $54 billion bid for Cigna on Feb. 8.Government antitrust officials had argued that both deals would lead to less competition and higher prices for Americans. The acquisitions would have reduced the number of large national U.S. insurers from five to three.After the defeat in court, Aetna and Humana initially said they were weighing an appeal. But they opted on Tuesday to scrap the proposed merger, sending Aetna shares up 3.2 percent to $126.06, while Humana fell 0.3 percent to $206.16.
Aetna will pay Humana a $1 billion breakup fee, or $630 million after taxes, and terminated its plan to sell some Medicare Advantage assets to Molina Healthcare Inc, the companies said.Cigna said on Tuesday that it had notified Anthem that it had terminated its merger and informed it that Anthem was required to pay a $1.85 billion breakup fee.
It also said in a press release that it had filed a lawsuit in Delaware to ask a judge to declare legal its decision to terminate the deal.Anthem, however, said the merger agreement was in place until April 30, 2017, and that Cigna could not back out. Anthem's share price dipped less than 1 percent to $163.26 while Cigna was up less than 1 percent at $145.97.
"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," Anthem said in a statement. (Reporting by Caroline Humer in New York, Diane Bartz in Washington and Ankur Banerjee in Bengaluru; editing by Jeffrey Benkoe and Dan Grebler)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: Feb 15, 2017 03:15 AM | Updated Date: Feb 15, 2017 03:15 AM