Anthem Inc (ANTM.N) on Friday called off a $54 billion (41.89 billion pounds) deal to buy Cigna Corp (CI.N), one day after the second-largest US health insurer lost a DE business court ruling that could have kept alive the chances of a combination.
The Justice Department filed a lawsuit to block the merger past year amid concerns the combination would substantially lessen competition in insurance markets around the country.
It's unclear whether or not Anthem will appeal this latest decision to the Delaware Supreme Court.
Anthem petitioned the US Supreme Court last week to intervene in that dispute.
A DE judge granted Anthem a temporary restraining order against Cigna in February, the Court of Appeals granted its request for an expedited appeal and President Donald Trump announced he had picked longtime Anthem lobbyist Makan Delrahim to head the DOJ's antitrust division. President Donald Trump has been seen as more friendly to deal-making than the Obama administration, which blocked the Cigna takeover as well as the tie-up of Aetna Inc. and Humana Inc.
Anthem also told Cigna it would not pay the $1.85 billion merger break-up fee.
Laster gave Anthem until Monday to decide whether to appeal his decision.
But not the end of the litigation: The two companies had sued each other in DE, and Anthem had hoped to get the Supreme Court to make a long-shot intervention in the deal.
While Cigna prevailed Thursday with the denial of injunction, Judge Laster made comments that could hurt the company down the line.
That's despite the fact that Cigna desperately wants to pull out; both companies have accused each other of souring the arrangement and Cigna has sued to collect billions in damages over alleged breaches.
"Money can't fix everything, but it can help a lot", the judge said in court.
A long and bitter legal road could lie ahead as each side accuses the other of violating the deal's terms and seeks a big payout in damages. Anthem says Cigna is not entitled to a termination fee of $1.85 billion because the company failed to comply with its merger obligations, and says it plans to pursue damages against Cigna. Acrimony between the companies already was high by the time the Justice Department's case against the merger went to trial last November.
After agreeing to the deal, Cigna eventually turned on it, saying Anthem worked to undermine Cigna's role in the transaction. But Anthem beat Cigna to it.