Jefferies' David Windley says Cigna (CI +1.6%) may not be idle for long if its proposed merger with Anthem (ANTM +1%) is blocked by the courts. The company will have $5B in deployable capital by the end of year, which could rise to $14B with a more aggressive posture towards M&A. Its ammunition will be further enhanced with the $1.85B breakup fee from Anthem.
Mr. Windley believes WellCare Health Plans (WCG +0.2%) is logical candidate, also Humana (HUM +0.4%), albeit a bit more difficult.
He rates CI a Buy with a price target of $155 (8% upside).
The NY Post reports that U.S. District of Columbia Judge Amy Berman Jackson is expected to rule against the marriage of Cigna (CI +2%) and Anthem (ANTM +1.5%) on antitrust concerns. Her decision may be issued as early as today.
Both companies filed 8-K's today in what appears to be a bit of jockeying ahead of the ruling. Anthem extended the termination date for the merger agreement to April 30, potentially allowing time for an appeal, while Cigna disclosed that it would "evaluate its options" as provided for under the agreement if the ruling is negative. According to sources, Cigna believes that testimony during the bench trial showed that Anthem failed to hold up its end of the merger agreement.
Investors appear unswayed, both stocks are up as are fellow insurers Aetna (AET +1.2%) and UnitedHealth Group (UNH +1.3%).
Cigna (CI) appears to be stepping back a bit from its proposed merger with Anthem (ANTM -0.1%). In a regulatory filing, it states that it "intends to evaluate its options" in accordance with the merger agreement following a district court's ruling on the merger, expected shortly.
In June 2016, the U.S. Department of Justice and certain attorneys general sued to block the transaction. The trial concluded on January 4.
Earlier today, Anthem reported that it had extended the termination date for the merger until April 30.
In a regulatory filing, Anthem (NYSE:ANTM) reports that it has extended the termination date for its proposed merger with Cigna (NYSE:CI) until and through April 30 citing the need for more time to complete the transaction.
Anthem (NYSE:ANTM) and Cigna (NYSE:CI) have accused one another of violating the terms of their merger agreement, according to the Justice Department, which is suing to block the health-insurance deal on antitrust grounds.
The claim is part of the DOJ's argument stating efficiencies from the insurers' $45B transaction will likely not bear out.
Other disagreements between Anthem and Cigna became public in the spring.
ANTM had sought a ruling by the end of the year because it said it needed time to wrap up merger reviews by state insurance commissioners by April 30, a deadline the companies set to complete the deal.
CI may be unwilling to agree to extend the deadline because of the contentious relationship between the two companies; also, if the deal does not close by April 30, CI can walk away with a $1.85B breakup fee.
The stocks had rallied in today's trade, with CI closing +5.2% and ANTM +1.5%, after a DoJ lawyer said the U.S. government is open to a settlement over the merger.
The judge overseeing two U.S. cases challenging mergers among four of the biggest health insurers gave up one, saying he will keep the case against Aetna's (AET +2.4%) deal for Humana (HUM +2.8%) while leaving the challenge to Anthem’s (ANTM +0.7%) takeover of Cigna (CI -0.1%) to another judge.
The decision is seen improving the odds for rulings on both mergers by year-end and lowering the chance that they fall apart beforehand.
Judge Bates, a Republican who has ruled against the government in the past and has voiced skepticism of various Justice Department actions, is considered more favorable towards the proposed AET-HUM deal, while the judge assigned to the ANTM-CI case is a Democrat appointed to the bench by Pres. Obama.
Anthem (ANTM +0.8%) has asked a judge to decide on its deal for Cigna (CI +0.8%) by the end of the year and to split its case off from the government's challenge of a second merger of insurance companies.
The DOJ filed lawsuits on July 21 asking a federal court to stop its takeover as well as Aetna's planned acquisition of Humana.
How are they different? Anthem is arguing that while all four companies are health insurers, its deal is concentrated on commercial health insurance while the other merger is focused on Medicare Advantage.
It's official. The U.S. Department of Justice (DOJ) has filed an antitrust suit in U.S. District Court in Washington, DC attempting to block the Anthem (ANTM +1.8%) and Cigna (CI +0.8%) merger and the Aetna (AET +0.9%) and Humana (HUM -0.4%) merger. In the complaint, the DOJ said the deals would be anti-competitive and would not be in the best interests of consumers.
Unsurprisingly, the four companies take the opposite view.
U.S. antitrust regulators are concerned about Anthem's (NYSE:ANTM) proposed acquisition of Cigna (NYSE:CI) and aren't sure the health insurers can offer concessions that would fully preserve competition in the industry, WSJ reports.
Company representatives met June 10 in Washington with Justice Department staffers and representatives of more than a dozen state attorneys general and have more meetings scheduled this week with top DOJ officials.
ANTM and CI would control 61% of California's administrative services market alone, the commissioner says.
ANTM says it is "confident that the highly complementary nature and limited overlap of our organizations that will benefit the complex and competitive health insurance markets will be reviewed on the facts by the DoJ and appropriate state authorities."
Quarrels have broken out behind the scenes of Anthem's (NYSE:ANTM) $48B proposed acquisition of Cigna (NYSE:CI) as the health insurers seek regulatory approval for their landmark deal, according to The Wall Street Journal.
People on both sides say the squabbles could delay or derail antitrust approvals, which are typically harder to obtain if both parties aren't in sync.
If completed, the deal would create the largest U.S. health insurer by members, with more than 54M, and $117B in annual revenue.