A merger between Indianapolis-based Anthem and fellow health insurance giant Cigna is officially dead – and Anthem says it won’t pay Cigna a break-up fee.
Anthem killed the $54 billion deal Friday after a failed bid to keep Delaware-based Cigna at the bargaining table.
Cigna began pulling out of the deal in February, after a D.C. court upheld federal antitrust challenges to the merger. Anthem hoped to appeal those challenges to the U.S. Supreme Court and tried to delay Cigna’s exit with an injunction.
A Delaware Chancery Court judge blocked that move Thursday, and Anthem’s decision to terminate the deal came soon after.
In a statement, the company says Cigna didn’t hold up its end of the bargain, so it’s not entitled to a $1.85 billion breakup fee.
Anthem says it incurred what it calls “massive damages” during the nearly two-year negotiation, promising to try to recoup some of those from Cigna.
Meanwhile, the smaller company has blamed Anthem for the deal’s failure.
Purdue University business analyst Richard Feinberg says consumers are the only group that’s sure to pay in the fallout.
“If you have to make more money to pay for expenses that you didn’t anticipate, the consumer pays,” he says. “And so, prices will go up.”
But he says it may preserve choice for customers in the long run.
In a statement Friday, the American Medical Association calls the deal’s failure “a clear victory to preserve competition in the health insurance industry.”