More on Mergers & Acquisitions

Anthem, Cigna saga not over as insurer demands Anthem pay the $1.85 billion breakup fee plus $13 billion

Anthem is fighting back against paying Cigna the $1.8 billion termination fee, saying Cigna refused to support the merger.

Susan Morse, Senior Editor

Now that the merger is definitely off, Cigna wants Anthem to pony up the $1.85 billion it says it is owed in a contractual breakup fee plus another $13 billion in damages.

"Anthem was required under the merger agreement to lead the regulatory approval process and to use its reasonable best efforts to obtain regulatory approval," Cigna said by statement Friday. "As Cigna has stated, it believes that Anthem willfully breached those obligations and as a result the transaction did not receive the requisite regulatory approvals. Cigna seeks prompt payment of the $1.85 billion reverse termination fee and will pursue our claims for additional damages of over $13 billion against Anthem for the harm that it caused Cigna and its shareholders."

[Also: UPDATED: Anthem terminates merger agreement with Cigna, won't pay break-up fee]

Anthem is fighting back against paying paying Cigna the $1.8 billion termination fee, saying Cigna refused to support the merger.

"Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee," Anthem said in its own statement on Friday. "On the contrary, Cigna's repeated willful breaches of the merger agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna."

During court proceedings earlier this year, emails and letters came to light showing a divisive relationship between the two insurers, with Cigna trying to exit the deal after the federal court denied the merger.

[Also: Anthem files petition to Supreme Court to review federal decision on failed Cigna merger]

Anthem successfully got a court order to temporarily keep Cigna in the agreement as it pursued an appeal. When the appeal held up the court's decision, Anthem sought review by the Supreme Court, and tried to keep Cigna from leaving. That effort ended on April 11 when a Delaware court denied that request and Anthem decided against pursuing an appeal.

By the terms of the July 2015 merger agreement and through extensions, Anthem and Cigna had until April 30 to merge. The breakup fee was part of the contract, in a deal valued at $54 billion.

"Cigna has a clear path to create value in the marketplace and looks forward to leading the healthcare industry in engaging customers and providing support through their diverse life and health stages while we also deliver sense of security solutions to our customers around the world," the company said. "Cigna will continue to invest in innovative capabilities and drive to further improve affordability and personalization in part through our value-based care models."

[Also: Federal Court rules against Anthem, upholds permanent injunction against Cigna merger]

In a move to solidify its marketplace position, Cigna said it planned to immediately increase the open market share repurchase activity.  Cigna's Board of Directors had previously authorized a share repurchase of $3.7 billion. Cigna has repurchased approximately 2.4 million shares of common stock for approximately $360 million. Cigna expects to repurchase at least half of the remaining authorization by December 31, it said.

Cigna said it would discuss its strategic growth plan during an Investor Day to be held on June 21, in New York City.

Twitter: @SusanJMorse

Yeezy 350 Boost