Anthem's efforts to purchase Cigna were dealt a potentially fatal blow Friday regardless of the medical health insurance giant's deep connections towards the White House.
A US appeals court blocked health insurer Anthem’s bid to merge with rival Cigna on Friday, upholding a lower court’s decision that the $54 billion deal shouldn't be allowed because it would result in higher prices for healthcare.
There was belief in recent weeks that Indianapolis-based Anthem, which has long supported Vice President and former Indiana Governor Mike Pence, was asking the government to broker a settlement on its merger.
Also, Anthem Leader Joseph Swedish in recent weeks had met with President Trump to talk about the healthcare landscape, based on reports.
The Department of Justice under President barack obama had sued to block the merger alleging it might stifle competition in the US healthcare industry.
The ruling will probably kill the proposed merger that was rejected by the US Justice Department, 11 states and a district court judge after consumers, medical professionals yet others objected to the deal. Ultimately, Cigna itself tried to back out.
Anthem could try to obtain the Supreme Court to hear its case, but even when it succeeds it may be too late.
Cigna, which wants out of the deal, has a court May 8 that will ask the court to permit it to terminate the deal. Since the appeals court has ruled Cigna will have an easier argument to make.
If the offer is terminated, Cigna believes it has a to a $1.85 billion break up fee and significant damages.
Once Cigna terminates the merger the offer will effectively be over, sources said.
Anthem had argued that the merger would benefit “national account” customers, mainly large companies with employees in many states. The Justice Department was skeptical that any savings would be passed on to customers.
Anthem’s acquisition of Cigna would produce the largest US health insurer. Rivals Aetna and Humana had also sought to merge but that deal collapsed this year amid opposition from the federal government and states.
Cigna's shares during mid-day trading were down about 1 % to $154.97.
Cigna declined comment, and Anthem didn't return calls.
