Cigna-Anthem deal ends in a lawsuit

Cigna (CI) says it’s rejecting Anthem’s (ANTM) proposed $48 billion acquisition bid and suing the Blue Cross-Blue Shield insurer.

The announcement comes hours after another major insurer, Aetna (AET), said it was abandoning its planned $34 billion purchase of Medicare Advantage provider Humana (HUM).

The Department of Justice sued last summer to stop both deals due to concerns about how they would affect prices and consumer choices. Federal judges rejected them in separate rulings earlier this year.

Anthem had filed paperwork Monday to appeal its case.

Cigna says it’s seeking a $1.85 billion termination fee from Anthem and more than $13 billion in damages caused by what it says were Anthem’s breaches of the merger agreement. “In light of the Court’s ruling, Cigna believes that the transaction cannot and will not achieve regulatory approval and that terminating the agreement is in the best interest of Cigna’s shareholders,” Cigna said in a release.

In a regulatory filing, Cigna explained why it wasn’t joining Anthem in an appeal: “Anthem has repeatedly and willfully breached the merger agreement in a manner that: (1) makes it highly unlikely that regulatory approval for the transaction will be obtained and (2) has harmed and will continue to harm Cigna’s interest and those of its shareholders.” It added: “Cigna has determined that there is no feasible path to ever completing the merger, let alone by April 30, 2017.”

An Anthem spokeswoman did not immediately return a call seeking comment.

The Aetna-Humana deal would have been another giant combination, but a federal judge, citing antitrust concerns, shot down it down. Humana is entitled to a $1 billion breakup fee after the mutual decision to call off the tie-up, first announced in the summer of 2015.

“While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” Aetna CEO Mark Bertolini said in a statement. 

U.S. District Judge John Bates ruled in January that combining insurance giant Aetna and health care provider Humana would hurt competition, echoing the concern of federal antitrust enforcers.