Cigna won’t be getting a $1.85B breakup fee after its attempted merger with Anthem dissolved, the Delaware Supreme Court ruled on Monday. The five-judge panel upheld that neither company would get anything from the breakup, as decided by Chancery Court Vice Chancellor J. Travis Laster last year.

In his decision last year, Laster wrote that each company “… must deal independently with the consequences of their costly and ill-fated attempt to merge.”

The two insurers struck a merger agreement back in 2015. Anthem had proposed to buy Cigna for more than $54 billion, in a deal that would have created the largest health insurer in the U.S.

But disagreements over who would lead the combined company, and an antitrust case, ultimately sunk the deal.

At one point, Cigna CEO David Cordani had expected to lead the combined company, starting as president and COO, and eventually succeeding former Anthem CEO Joseph Swedish. But as Anthem began to act more like an acquirer, and began to iron out the details of how the two companies would integrate, Cigna began to push back, according to court documents. Tensions between the two companies continued to escalate.

In 2016, the Department of Justice launched an antitrust case against the deal. A year later, Cigna filed a suit against Anthem, seeking to end the merger agreement, while Anthem filed its own lawsuit to keep the merger in place and appeal the DOJ’s lawsuit

Both companies had sought damages from the falling out; Cigna had sought a $1.85 billion breakup fee and $13 billion in damages for the loss to shareholders. For its part, Anthem sought $21 billion, claiming Cigna sunk the deal on purpose. Neither company will get anything, as per Laster’s ruling.

Will the decision by Delaware’s highest court finally bring an end to this “corporate soap opera,” as Laster called it?

There are still a few loose ends to sort out. An Anthem shareholder filed a derivative suit in 2018 against Swedish and other current and former Anthem leadership, alleging a breach of fiduciary duties, unjust enrichment and corporate waste associated with the merger agreement. The case had been stayed while both companies awaited the Delaware court’s ruling, Anthem noted in its most recent quarterly report.

Cigna investors also sued over the deal, according to a case that was unsealed last year in the Delaware Chancery Court. The Massachusetts Laborers’ Annuity Fund, a pension fund, alleged that Cordiani intentionally worked to “blow up” the deal after he wasn’t picked to lead the combined company.

Cigna could not be reached for comment at the time of publication.

Photo credit: Kuzma, Getty Images



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