Anthem Inc., whose $48 billion acquisition of healthcare insurance rival Cigna has run into stiff regulatory headwinds, appears prepared to walk away from the offer, The Post has learned.
Anthem Chief Financial Officer John Gallina told a group of 20 analysts earlier the Indianapolis-based company ran “remediation plans” that include buying assets from Aetna, two sources in the meeting last week said.
Anthem, no. 2 healthcare insurer in the US, would not be referring to buying assets from Aetna – which is while buying rival Humana – if it intended to press ahead with plans to buy Cigna, the fourth-largest health-care insurer, sources said.
The discussion by Gallina occurred on June 21 – just 5 days after California regulators ripped in to the deal, saying it might lead to higher insurance costs.
The state's insurance commissioner urged Washington to block the deal.
While Wall Street believes the Department of Justice will probably sue in July to block the mega-deal, it's not known whether Anthem would stand and fight the move by the country's highest regulator.
Anthem's agreement runs through January 2021 – therefore it has the time for you to fight.
At the same time frame, fighting would be risky. Not only may Anthem lose, but it will likely lose out on the chance to buy Aetna's assets.
Gallina's talk with the analysts would appear to indicate the company is ready to cut and run.
Anthem announced last summer it reached an agreement to purchase Cigna.
The deal includes a $1.85 billion breakup fee.
The breakup from the Anthem-Cigna deal would help the pending Aetna-Humana deal, sources said.
Regulators are pressing each of those companies to sell off assets to gain approval.
Aetna is in the procedure for shopping Medicare Advantage plans in certain markets to buyers, and Anthem cannot pursue them until it abandons its merger, sources said.
At the same time, there are some whispers that Anthem and Cigna have begun discusses renegotiating the huge breakup fee.
An Anthem spokeswoman, though, said, “Anthem and Cigna aren't in discussions regarding a termination from the merger agreement or the payment of the breakup fee.”
She didn't have discuss any statement made by Gallina in the June 21 meeting.
“Anthem and Cigna still hold an ongoing dialogue using the DOJ assuring regulators concerning the compelling combination of our two companies to improve consumer use of top quality, affordable health care,” she said.
Cigna and Aetna spokesmen declined comment.
The Post on May 20 was the first one to report that the DOJ did not like the Anthem deal.
Cigna, too, is probably thinking about buying a number of Aetna and Humana's Medicare Advantage assets, sources said.
“The sooner the Anthem deal goes away, the better it's for Aetna [in its search for buyers],” a resource said.
