Anthem secured its win Monday, May 3, against Cigna’s quest for a US$1.85 billion breakup fee over the collapse of their planned US$54 billion merger, which would have created the world’s largest health insurer, when Delaware’s top court upheld a decision rejecting the fee bid.
The state’s justices affirmed a Delaware Chancery Court decision “on the basis of and for the reasons” given by Vice Chancellor J. Travis Laster in his 311-page decision last year, which ruled against each company’s attempts to recoup billions from the other, reported Bloomberg Law.
Anthem had requested US$21 billion from Cigna, which sought US$16 billion in turn, over the deal’s failure in 2017 after the Justice Department successfully challenged it on antitrust grounds.
Although the judge held that neither side was entitled to damages, he largely adopted Anthem’s view of the case, saying Cigna sought to sink the deal because Anthem would have controlled the combined company, which Cigna had viewed as a merger of equals.
He rejected Cigna’s bid for a US$1.85 billion breakup fee on that basis.
The Delaware Supreme Court ruling Monday clears the way for separate shareholder litigation to resume against Cigna’s leaders blaming them for the merger’s breakdown.
That suit—filed by a pension fund claiming Cigna’s board and CEO used “black ops style” tactics to “blow up” the deal—had been paused pending the outcome of Cigna’s appeal.
The merger agreement called for Anthem, which runs Blue Cross and Blue Shield insurance plans, to acquire Cigna. Anthem’s breach-of-contract suit accused Cigna of undermining the transaction by working to help the government’s antitrust case.
Cigna brought breach-of-contract claims, too, claiming the merger fell apart because of flaws in Anthem’s strategy for getting antitrust clearance, which was its responsibility. Cigna also argued it was entitled to a US$1.85 billion “reverse termination” fee after calling off the deal over those regulatory failures.