Cigna Healthcare, a Connecticut-based insurance company, was in the process of being acquired by Anthem, Inc, but the deal has been blocked, and may fall apart. Cigna Healthcare is one of the 20 biggest single employers in Williamson County and has a regional office in Franklin.
Anthem has said it may cut Cigna jobs if the deal goes through, according to the New York Post.
“At this point, it is impossible to know what would happen to the local Williamson County office if the acquisition takes place,” Matt Largen, Williamson, Inc. CEO said. “We have a great relationship with Cigna, and we would work closely with them to assist with their employment situation post-acquisition.”
Anthem, Inc, a national health insurer, has been putting together a deal to purchase Cigna for $53 billion over the past year, but in July the U.S. Justice Department sued to block it.
“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry,” Attorney General Loretta Lynch said in a news conference, announcing the lawsuits on July 14 . “They would leave much of the multitrillion-dollar health industry in the hands of three mammoth insurance companies, restricting competition in key markets.”
After the lawsuit came out, there were signs that the deal might have started falling apart.
“We do not believe the transaction will close in 2016, and the earliest it could close is 2017, if at all,” Cigna’s statement reads. Cigna disclosed pessimism on the prospects of the deal in its first quarter regulatory filing with the Securities and Exchange Commission. In the Anthem-Cigna merger, Anthem has until April 30, 2017, to close the deal before paying Cigna a $1.8 billion breakup fee. The companies, according to press releases, were trying to get the case heard as soon as possible in order to have time to close the deal before the deadline. But the judge overseeing the case, U.S. District Judge John Bates, had it scheduled for December or January- which would make meeting the break-up deadline very tight.
But new life was breathed into the earlier in August, when Judge Bates sent it back to be reassigned following requests by Anthem to expedite the proceedings, according to a Modern Healthcare report.
Court filings show that U.S. District Judge Amy Berman Jackson was assigned the Anthem-Cigna lawsuit. However, Bloomberg reports that Cigna Corp. CEO David Cordani’s actions indicate that the company does not expect the deal to go through.
Cigna stock has reacted to the lawsuit. Stock fell from $146.00 on July 22 to $124.13 by August 2. Since then- despite the ostensibly good news that the trial would be expedited, or at least not delayed- the stock has not recovered greatly but also has not dipped lower. The overriding consensus appears to be wait-and-see on the stock, with the company playing it safe but also sending mixed messages, by both expecting the best and preparing for the worst publicly.
Before the announcement of the suit, Cigna (CI) stock had hit its second-highest value ($146.00 on July 22 on the NYSE) since news of the acquisition by Anthem first broke. Throughout the previous year, after news of the acquisition but before the lawsuit was officially filed, Cigna bounced up and down frequently- with a low of $122.09 on the NYSE on June 22 a high of $148.37 on December 29, 2015. Its high in the past year came in the weeks before and after the merger- peaking at more than $160 in late June of 2015.
News of the change in judge stopped any further fall, as the stock inched back up, reaching $132.63 as of this morning
The current situation remains fluid. However, overall the Anthem acquisition has still been good for the stock. Even trading at or near its lowest levels since the news last summer, it is still well above its five-year average. Before 2015, Cigna had never traded higher than $105 on the NYSE.
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