Anthem has announced it is terminating the merger agreement with Cigna. The deal has been fraught with issues since its announcement in July 2015 and was blocked in February 2017 by a federal court in an antitrust case brought by the U.S. Department of Justice. Anthem appealed the decision, which was upheld. Rather than taking the case to the U.S. Supreme Court, Anthem has decided to withdraw from the merger.
Now the carriers will battle over the break-up fee and damages. Cigna wants the $1.85 billion break-up fee stipulated in the agreement and $13 billion in damages. It accuses Anthem of failing to take reasonable steps to obtain regulatory approval for the merger. Anthem is fighting back and says Cigna is not entitled to the break-up fee because it took steps to sabotage the deal. Not only does Anthem insist it does not owe the fee but that it is entitled to damages. Rather than continuing to litigate, it is likely the carriers will negotiate and reach some sort of agreement on the fee and damages.