Anthem Says Cigna Merger Is on Track -- WSJ
May 25 2016 - 3:04AM
Dow Jones News
By Liz Hoffman and Anna Wilde Mathews
Anthem Inc. Chief Executive Joseph R. Swedish acknowledged
"dynamic tension" with Cigna Corp. over their $48 billion pending
merger, but said the health insurers had resolved differences and
are on track to receive regulatory approval.
The Wall Street Journal had reported that Anthem and Cigna were
privately sparring on several fronts as they work toward antitrust
clearance, citing letters their executives exchanged as recently as
this month.
Speaking at an investor conference in New York, Mr. Swedish
called the disputes "old news." He said the companies are working
well together and have "virtually met all the deadlines up to this
point" in the antitrust review by the Justice Department.
He acknowledged disagreements, without addressing them in
detail. In the letters, Cigna accuses Anthem of bungling
submissions to regulators, while Anthem accuses Cigna of being slow
to share information. Mr. Swedish and Cigna CEO David Cordani have
also had differences in the 10 months since the deal was struck,
the Journal reported.
"You would expect dynamic tension in terms of ultimately
deciding what is best-of-breed -- what parts do you keep, what
don't you keep, who leads what," he said. He said executives were
working to make the integration "as seamless and as smooth as
possible, and quite frankly along the way you hit these bumps."
Tom Zielinski, Anthem's general counsel and the author of
several of the letters reviewed by the Journal, added that the
companies "have worked through our differences of opinion."
A Cigna spokesman declined to comment.
Cigna shares fell 1.1% Tuesday to $124.81. Anthem's fell 3.5% to
$128.48. The gap between Cigna's trading price and the deal's
value, which reflects investors' view of the odds it will go
through, narrowed by about $1 a share after widening by some $4
Monday.
The Anthem executives said they are confident the deal will
receive antitrust approval. Mr. Zielinski said Anthem believed the
market for health benefits provided by large, multistate employers
"is not a national market." Employers often divvy up their health
coverage, using different insurers to administer benefits in
different regions, he said.
He said if regulators disagree, there are ways to address
Justice officials' concerns. In the letters, Cigna expressed
concerns that Anthem hadn't yet prepared a backup plan if
regulators sue to block the deal or demand divestitures.
Mr. Swedish said the companies' projected $2 billion in annual
synergies from the deal are "still very likely." Such cost savings
could be passed on to customers and are seen as key to convincing
regulators the deal is pro-competition.
Write to Liz Hoffman at liz.hoffman@wsj.com and Anna Wilde
Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
May 25, 2016 02:49 ET (06:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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