Anthem and Cigna Corp. remain contentiously at odds over their pending deal, with attorneys on both sides alleging the other last month of breaching the terms of their merger agreement.
Cigna disclosed “further deterioration” between the two companies during an Aug. 16 teleconference, explaining that in-house attorneys for Anthem and Cigna exchanged letters that said the other side violated the pact involving their $53 billion merger, according to a U.S. Department of Justice court filing Wednesday.
The federal government, which sued to block the deal in July on antitrust grounds, submitted its latest filing with the hope of receiving all relevant documents between Anthem and Cigna. DOJ attorneys believe the “adversarial communications” contradict Anthem's argument that the transaction will create efficiencies and instead will lead to a messy integration.
“Governance disputes between defendants have escalated, and the firms are now accusing each other of breaching the merger agreement,” DOJ attorneys wrote. “Because the breach letters reveal the current state of hostility between defendants, the letters evince barriers to integrating these firms and are relevant to the efficiencies defense.”
Anthem would have to pay Cigna a $1.85 billion breakup fee if the deal falls through. The trial is expected to start later this year.
The Anthem-Cigna marriage has been fraught with tension from the outset. Cigna, which initially failed in acquiring Humana in 2015, publicly rebuffed Anthem's first takeover offer. Cigna CEO David Cordani also wanted a guarantee he would be the CEO of the combined company once Anthem CEO Joseph Swedish retired—a provision Anthem executives would not guarantee.
The DOJ also is challenging Aetna's $37 billion takeover of Humana. Aetna, Anthem and UnitedHealth Group would become the three major for-profit insurance companies if both transactions are greenlighted.