Aetna, Humana Terminate Merger Deal After Court Defeat

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Aetna and Humana haven't yet made a decision to appeal the court order blocking their merger, but Anthem immediately filed an appeal with the U.S. Court of Appeals for the District of Columbia Circuit.

Shares of Cigna rose 0.6 percent, while Anthem dropped 0.4 percent.

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Anthem on January 18 extended its merger agreement with Cigna through April 30, 2017.

Cigna, disappointed in the outcome of the process, said it now believes that the transaction "cannot and will not" achieve regulatory approval and that terminating the deal is in the best interest of shareholders.

Many health-care and antitrust attorneys that I spoke to said the combined force of both decisions should frustrate other proposed mega-mergers in the health insurance industry.

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"Cigna believes that the transaction can not and will not achieve regulatory approval and that terminating the agreement is in the best interest of Cigna's shareholders", the Connecticut-based company said in a written statement.

The lawsuit Tuesday comes on the same day Aetna and Humana agreed to terminate its merger after a U.S. District Judge blocked the deal, saying it was anticompetitive and lead to higher prices for consumers. The suit seeks declaratory judgment that Cigna has lawfully terminated the merger agreement and that Anthem is not permitted to extend the termination date. Instead of simply going off their separate ways, Cigna is now suing Anthem, seeking billions in damages. At the same time, Cigna seemed hesitant to commit to fighting for the merger.

"In light of the Court's ruling", Cigna writes, it "believes that the transaction can not and will not achieve regulatory approval and that terminating the agreement is in the best interest of Cigna's shareholders".

Last week, U.S. District Judge Amy Berman Jackson ruled against the merger, stating it would significantly reduce competition in the already concentrated health insurance market, especially for big national employers.

Cigna, which filed a lawsuit against Anthem in a DE court, said Anthem isn't allowed to extend a termination date of its deal.

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