Blog Coverage: Anthem Unwilling to Give up Hope for Merger with Cigna; Files Petition in U.S. Supreme Court to Review the Deal

LONDON, UK / ACCESSWIRE / May 8, 2017 / Active Wall St. blog coverage looks at the headline from Anthem, Inc. (NYSE: ANTM) and Cigna Corp. (NYSE: CI). On May 5, 2017 Anthem shared that it is planning to file a petition with the U.S. Supreme Court, requesting it to review the deal to acquire Cigna. Anthem is filing a “writ of certiorari” with the U.S. Supreme Court requesting it to review the merger precedents following the ruling by U.S. Court of Appeals on April 28, 2017. Anthem urged the Supreme Court, that the 1960s-era merger precedents relied upon should be updated in favor of a modern understanding of economics and consumer benefit. Register with us now for your free membership and blog access at:

http://www.activewallst.com/register/

Today, AWS is promoting its blog coverage on ANTM and CI. Get all of our free blog coverage and more by clicking on the link below:

http://www.activewallst.com/register/

Series of legal setbacks to the Anthem/Cigna merger

Healthcare Insurance Company Anthem had announced the acquisition of rival Cigna back in July 2015. The merger aimed to consolidate Anthem’s Blue Cross and Blue Shield footprint in 14 states and Medicaid footprint via its Amerigroup brand in 19 states and Cigna’s broad portfolio of health and protection services. However, the merger was blocked by U.S. Department of Justice (DOJ) when it filed a civil antitrust lawsuit in July 2015. The anti-trust regulators were against the merger of the top four out of the five health insurance Companies i.e. merger of Anthem/Cigna and Aetna/Humana. The District of Columbia and nine other states joined the DOJ’s suit against the Cigna/Anthem merger.

In February 2017, U.S. District Court for the District of Columbia ruled against the Anthem/Cigna merger saying that the deal would “lessen competition substantially” in the sale of commercial health insurance. In the meantime, Anthem’s relationship with Cigna had deteriorated vastly since the signing of the merger agreement. The matter worsened to the extent that it was noticed by the media covering the matter as well as the District Judge Amy Berman Jackson, who referred to the tension as the “elephant in the courtroom”.

Following the U.S. District Court’s decision, in February 2017, Anthem filed an appeal against the District Court’s decision, with the U.S. Court of Appeals for the D.C. Circuit.

In April 2017, The U.S. Court of Appeals upheld the lower Court’s decision and ruled against the Anthem/Cigna merger. The Federal Appeals Panel gave a split 2:1 vote to block the deal. The Appeals Court rejected Anthem’s claims that the merger would lead to $2.4 billion in savings by reducing reimbursements paid to physicians and health care facilities.

Anthem is approaching the Supreme Court based on the split decision of the Court of Appeals. U.S. Circuit Judge Brett Kavanaugh was the one with the dissenting vote. In his dissent he had said: “the record evidence decisively demonstrates that this merger would be beneficial to the employer-customers who obtain insurance services from Anthem and Cigna.”

Anthem is hopeful that the change in the political leadership would work in its favor. Industry experts are, however, not so optimistic, and they feel that Anthem has a very slim chance of ever going ahead with the merger. Interestingly, the extended contractual deadline for the merger agreement has ended as on April 30, 2017.

Extended legal Drama on the side-lines

As this legal battle continues, Anthem and Cigna have filed suits and counter suits in February 2017. Cigna has filed a case against Anthem with the Delaware Court of Chancery and is seeking a $1.85 billion in breakup fees which were guaranteed in the merger agreement as well as additional damages to the tune of $13 billion. Anthem has filed a counter suit seeking a temporary restraining order against Cigna to stop it from terminating the merger and that it complies with the terms of the merger agreement as well as the payment of damages. Anthem’s contention is that Cigna tried to sabotage the merger agreement and hence is not eligible for the termination fees or damages. The Delaware Judge has blocked Cigna from walking away from the merger deal till the Court’s ruling, which is due on May 08, 2017. If the Delaware Court rejects Anthem’s plea, Cigna would be free to pursue other options.

Although Anthem is committed to the merger, the acrimonious relationship between Anthem and Cigna would make it interesting to see how the story unfolds in the future; especially given that Cigna has openly requested for the termination of the merger.

Stock Performance

On Friday, May 05, 2017, the stock closed the trading session at $180.30, marginally up by 0.23% from its previous closing price of $179.89. A total volume of 1.21 million shares have exchanged hands. Anthem’s stock price surged 13.78% in the last three months, 47.85% in the past six months, and 34.01% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 25.90%. The stock is trading at a PE ratio of 17.47 and has a dividend yield of 1.44%. At Friday’s closing price, the stock’s net capitalization stands at $47.79 billion.

At the closing bell, on Friday, May 05, 2017, Cigna’s share price finished the trading session at $160.25, advancing 2.25%. A total volume of 1.62 million shares exchanged hands, which was higher than the 3 months average volume of 1.31 million shares. The stock has surged 36.01% and 18.80% in the last six months and past twelve months, respectively. Moreover, the stock rallied 20.17% since the start of the year. The Company’s shares are trading at a PE ratio of 22.28 and have a dividend yield of 0.02%. The stock currently has a market cap of $41.21 billion.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

ReleaseID: 462412