Unsealed court documents show deep divide between merging parties

November 30, 2016

Testimony from Anthem CEO Joe Swedish and Cigna CEO David Cordani has been unsealed following a request from Judge Jackson for greater transparency from the parties. The companies originally wanted testimony sealed to protect sensitive business information from being gleaned by competitors. However, once the testimony was actually given, the parties determined almost no commercially sensitive information had been shared and consented to the court releasing the testimonies.

 

Anthem and Cigna have been publicly squabbling about this merger for months. In the early part of the summer, there was speculation about whether this case would even make it to trial, or fall apart beforehand. 

 

Cigna is a “reluctant bride” in the merger. While it is true that the company agreed to merger terms negotiated with Anthem, the transaction isn’t simple. Both companies have accused each other of violating the terms of the merger. The two CEOs have very different philosophies about how to manage the merger as well as the new company. It is not even clear what Cigna CEO Cordani’s role will be should the merger go through. If the acquisition does not occur, Cigna will receive a $1.85 breakup fee payment from Anthem. 

 

The details of these behind-the-scenes fights were the big reveal in the unsealed transcripts. At several points Anthem attempted to press on with the merger process unilaterally, without cooperation from Cigna. Adversarial notes were sent between the CEOs. There were disagreements about the scope of Cordani’s oversight of the company. Cordani had previously questioned whether the deal would be good for Cigna’s brand. He said Cigna believed “choice would potentially be constricted” if the merger caused Anthem to apply its setup to Cigna’s clients.

 

This type of infighting is not common in merger cases. It is especially relevant to this case, because smooth integration is an absolute must for the companies to deliver promised efficiencies. The merger of Anthem and Cigna would be one of the largest health care mergers ever, and integration of complex behemoths is not easy. What is promised — a streamlined value-based system and a more convenient network for large employers — would not be guaranteed in an environment of power struggles and lack of communication. If it could happen, it would take years. 

 

Judge Jackson was clearly puzzled by this passive aggressive dynamic. She will have to decide whether the efficiencies argument is credible, given the extreme challenges these companies already have working together. 

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