Appeals court blocks merger bid
1 May, 2017, 12:00 am
A US appeals court on Friday blocked health insurer Anthem Inc’s bid to merge with Cigna, upholding a lower court’s decision that the $54 billion deal should not be allowed because it would lead to higher prices for healthcare.
The ruling will probably kill the proposed merger, which was opposed by the US Justice Department, 11 states and a District Court judge after consumers, medical professionals and others objected to it. In the end, Cigna itself tried to back out.
Still, Anthem and Cigna have the option of trying to save the deal by asking the appeals court to re-consider the case or appealing straight to the US Supreme Court. Shares of Cigna closed on Friday at $156.37, up 0.1 per cent, while Anthem shares ended at $177.89, down 0.2 per cent.
Anthem’s purchase of Cigna would create the largest US health insurer. Rivals Aetna Inc and Humana Inc had also sought to merge but that deal collapsed this year amid opposition from the federal government and states.
Insurers made the deals as they adjusted to new pressures from the insurance overhaul of Obamacare, officially known as the Affordable Care Act. They now face the potential for another remaking of the industry, though the exact changes are unclear because of Republican disagreements over how to repeal and replace Obamacare. Anthem, said in a statement late Friday that it was disappointed by the appeals court’s decision.
“We are committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options,” the company said in a statement.