Cigna will not be merging with Anthem. Wednesday night, a federal judge released her decision blocking the $48 billion deal between the two rivals, saying the tie-up is anti-competitive and would stifle innovation.
Judge Amy Berman Jackson was most concerned about the effect on large national accounts with major employers.
The decision was the second denial of a huge health insurance merger -- Aetna was recently blocked from buying Humana. The two rulings mean that the number of large health insurers remains at five, instead of shrinking to three.
It also ended months of uncertainty for Cigna, which seemed to grow increasingly disenchanted in its merger negotiations with Anthem.
Bloomfield-based Cigna has already spoken of being ready with plan B in case the deal didn’t go through. CEO David Cordani told analysts the company has billions of dollars in capital stockpiled ready to make new acquisitions.
The two companies issued differing statements on the ruling. Anthem, which will owe its partner a $1.85 billion breakup fee, if the deal fails, seems determined to continue.
"The company promptly intends to file a notice of appeal and request an expedited hearing of its appeal to reverse the Court’s decision so that Anthem may move forward with the merger, which was approved by over 99% of the votes cast by the shareholders of both companies." it said in a statement.
“Anthem is significantly disappointed by the decision as combining Anthem and Cigna would positively impact the health and well-being of millions of Americans - saving them more than $2 billion in medical costs annually,” said Joseph Swedish, Anthem's CEO.
Cigna was less definitive about its intentions, issuing only the briefest of statements.
"Cigna intends to carefully review the opinion and evaluate its options in accordance with the merger agreement." it said. "Cigna remains focused on helping to improve health care by delivering value to our customers and clients and expanding our business around the world."
The Connecticut State Medical Society welcomed the ruling. "This is a clear victory for physicians and patients, protecting accessibility, affordability and quality of medical care," the society said in a statement. "In Connecticut, the merger would have further consolidated our state’s already highly-concentrated insurance market. Judge Berman’s ruling complements the ruling by Judge John Bates in the Aetna-Humana merger case."
Senator Richard Blumenthal, who has consistently opposed the deal, also voiced his approval of the ruling.
"Mega mergers kill jobs, and in the health insurance market, lead to higher prices for consumers and lower quality care,” Blumenthal said. “Instead of consolidating, I want these insurers to grow and succeed as competitors, so they can do more business and more hiring here in Connecticut.”
