Shares of Anthem were down about half a percent immediately after the announcement. ANTM and Cigna Corp.
Humana Inc says that it will be releasing a press release to investors later today. The fate of both deals represents a victory for the Obama administration's antitrust officials, who were able to win the cases despite major differences between the two transactions.
The two mega mergers caught the ire of the regulators since the very beginning due to their mammoth size. "But if there is more consolidation, the market power shifts to the insurance companies, where they have a "take it or leave it" attitude because they are the only player in town". The acquisitions would have reduced the number of national USA insurers from five to three. So they were not seen as being in the best interest of consumers, physicians and hospitals, which would end up with weaker negotiation power.
An Anthem spokeswoman said the company extended the merger agreement through April 30, meaning 'Cigna does not have a right to terminate the agreement'. There's also a $1.8 billion breakup fee that Cigna's owed in the event this ruling is final. But they opted on Tuesday to scrap the merger. The company delayed offering a forecast for 2017, saying that they would provide an update on the proposed $37 billion acquisition by Aetna in a conference call no later than February 16. Aetna also gave up its proposal to sell Medicare Advantage assets to Molina Healthcare Inc. The regulators were, however, unmoved.
The bad rapport between the insurers stems from even before the deal was struck.
Aetna and Humana have both pulled out of multiple states serviced by the Obamacare exchanges, leaving consumers with fewer competitors in the marketplace.
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Anthem and Cigna, the nation's second- and third-largest health insurers, suffered a similar federal court ruling last week when a judge blocked their $48 billion deal on antitrust grounds. The companies were already in a bitter war.
Analysts have speculated that Humana, which is strong in the Medicare Advantage business of selling private Medicare plans, could now be targeted in a future deal, by either Anthem or Cigna.
Cigna filed the lawsuit against Anthem in Delaware.
Anthem said Wednesday that it was Cigna that had tried to undermine the merger.
Cigna's announced 2017 growth outlook for adjusted income from operations of 12% to 18% will be further aided by its significant capital available for deployment.
The suit argues Cigna has lawfully ended the merger agreement and that Anthem is not permitted to extend the termination date.