A U.S. appeals court applied the final blow to the plans of Anthem Inc. to purchase the ownership over its rival, Cigna Corp. The ruling of the case explained that the $54 billion acquisition would lead to a too big a market domination. As such, there would be nothing to stop consumers from having to pay high prices when it comes to healthcare.
The Appeals Court Found the Merger against the Interest of Consumers
Medical professionals and consumers were the first to trigger the alarm signal regarding the Anthem and Cigna merger. The U.S. Justice Department, a District Court Judge, and 11 states took over the situation and appealed to legal action. The Friday ruling declared itself in favor of consumers and blocked the merger of two major rivals in the pharmaceutical industry. Eventually, Cigna itself decided to call the operation off altogether.
However, this might not be the end of such ambitions. The two companies can revive the $54 billion deal by demanding the U.S. appeals court a reconsideration of the case. As a final solution, they can also head to the U.S. Supreme Court for an appeal of the ruling.
In light of this Friday event, the stock market wasn’t late for a reaction. Shares of Signa ended at $156.37 on Friday, which was 0.1% up. On the other hand, Anthem shares dropped 0.2% to $177.89. The idea of a merger created such a high wave of disapprovals as it would have formed an unstoppable U.S. health insurer.
Trump Administration Is Considering Changes in the Industry
The idea of a merger among major healthcare players is not new. Rivals Humana Inc. and Aetna Inc. had also tried to combine their assets. However, the federal government succeeded in collapsing the negotiations this year as well.
The efforts to take down such business actions reflect the fear of authorities for an unbalanced situation within an important market. On the other hand, companies are finding the idea of a merger more and more appealing as Trump administration is seriously considering taking Obamacare down. Organizations that activate in the healthcare indsutry are getting ready for big changes ahead. However, it is not clear yet how Republicans intend to support the absence of the Affordable Care Act.
Nonetheless, the relationship between Anthem and Cigna was not off to a great start. On the contrary, they are meeting in courtrooms to address one problem to another. Cigna wanted to drop the deal and demand $1.85 billion from Anthem as a fee. However, Anthem took legal action to force its rival into a merger.
Image source: 1