Failed merger of two health insurers Anthem and Cigna has become a legal battle between them. On Wednesday, the court issued an order to prevent the deal to be terminated.
Judge on the Delaware Chancery Court J. Travis Laster issued an order to allow the deal to be extended until April, Wall Street Journal reported. The terms in the merger agreement mentioned that Cigna is able to extend the deal. The court order was filed to the Securities and Exchange Commission on Thursday.
Anthem sought to file an appeal to the court ruling that blocked the merger on the grounds that this would harm the consumers. The ruling was issued on Feb. 8 by Judge Amy Berman Jackson from the District of Columbia Federal District Court, citing the merger would eliminate competition and reduce the innovation.
Previously, Cigna sued its merger partner seeking for $1.85 billion termination fee and $13 billion in damages, according to CBS News. Cigna decided to walk away from the merger deal and accused Anthem for breaching the merger agreement. Ending the merger will serve the best interest for Cigna’s shareholders, because Cigna believes the merger would not win regulatory approval.
On the contrary, Anthem still wants to pursue the regulatory approval for the $48 billion merger plan. For that reason, Anthem filed a notice of appeal to the judge Jackson ruling.
The failed merger between the companies has now ended in a legal battle that will become a long one. Both Cigna and Anthem has prepared their arsenal to defend their position on court.
Meanwhile the banks that advised both companies for the merger has to get involved in the legal battle between the companies, together with the legal team from each companies. Anthem was advised by UBS and Credit Suisse, while Morgan Stanley is advising Cigna. The legal battle will prolong their fees to be paid after failed merger has also reduced their fees.
Watch the report regarding the court ruling to block merger deal between Anthem and Cigna from Reuters below:
