Health insurers Aetna Inc and Humana Inc said on Tuesday that they would end their $34 billion merger agreement after a US federal court ruled against the deal, saying it would stifle competition in the Medicare Advantage program. Cigna said it filed a lawsuit against Anthem in the Delaware Court of Chancery seeking full payment of the break-up fee and an amount exceeding $13 billion, because that's what Cigna shareholders did not obtain as a result of the merger falling through, the insurer said.
"Anthem believes that there is still sufficient time and a viable path forward potentially to complete the transaction", the company said.
Aetna Inc and and Humana Inc have mutually agreed to call off the merger deal, which was valued at $34 billion.
The deal was shot down by a U.S District Court for the District of Columbia ruling that granted the U.S. Department of Justice request to enjoin the merger on the grounds that it violated antitrust laws. She also noted that the deal was riven with discord between the two companies, which she said undermined their justification for the combination.
On January 18, 2017, Anthem extended its Merger Agreement with Cigna through April 30, 2017. Cigna intends to vigorously defend against the Anthem litigation and pursue its own action against Anthem for the damages that Anthem has caused Cigna and its shareholders. The decision was taken following a "no" from the federal court with respect to their deals.
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Another mega-merger between Anthem and Cigna was canceled several hours later, this one did not end as well. Rivals Aetna Inc and Humana Inc had sought their own merger, representing an unprecedented consolidation among US health insurers. As the fate of the Affordable Care Act is shrouded in confusion, health insurance companies are hard-pressed to prove to the Department of Justice (DOJ) that consolidation deals do not limit competition in the market.
Last week, Humana released an earnings report that revealed little about whether the company would fight on in court or walk away from the Aetna deal.
It all started back in July 2015 when Anthem announced its intention to buy Cigna for $54 billion. With the deal up in the air, Cigna is now filing a $15 billion lawsuit against Anthem.
Aetna shares rose 2 percent to $124.52, while Humana fell 0.3 percent to $206.14.