Cigna
rebuffs Anthem's 'deeply disappointing' proposal
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[June 22, 2015]
(Reuters) - Health insurer Cigna
Corp rebuffed Anthem Inc's <ANTM.N> $47 billion merger proposal on
Sunday, saying it was "deeply disappointed" with Anthem's recent actions
and the offer was not in the best interest of shareholders.
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Anthem's offer for smaller rival Cigna is part of a daisy chain of
potential deals in the health insurance sector. The biggest players
are seeking acquisitions to boost membership in government-paid
healthcare plans and employer-based insurance. The bigger the
insurer, the more negotiating power it has with prices and improving
its doctor networks.
Cigna Chairman Isaiah Harris, Jr. and Chief Executive David Cordani
wrote a letter to Anthem's board outlining reasons why the company
was rejecting Anthem's stock and cash offer. The list included
Anthem's "lack of growth strategies," complications related to its
membership of Blue Cross Blue Shield Association and its "massive"
data breach in February.
"We have attempted to engage in dialogue so that we can understand
and consider these issues," the letter said. "Unfortunately, you
have continued to avoid addressing these key concerns and have
failed to demonstrate what has changed over the past few months."
Anthem, the second-largest U.S. health insurer, said in a statement
on Saturday that had made four offers for Cigna in June.
Cigna's board is also concerned over Anthem's "insistence" that one
person - Joseph Swedish, Anthem's president and CEO - assume four
roles of the combined company: chairman, CEO, president and head of
integration.
"Your proposal raises very serious questions regarding your views on
proper governance, board oversight and risk management and
underestimates the complexity of combining our organizations."
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A representative for Anthem was not immediately available to
comment.
In another strand of the consolidation efforts, Cigna and Aetna Inc
<AET.N> are vying to acquire Humana Inc <HUM.N> according to
sources.
Anthem's Swedish published a letter on Saturday that said it doubted
that investors supported Cigna's rejection over Anthem's refusal to
guarantee that the CEO role would go to Cordani. Cigna, according to
Swedish's letter, had also refused to sign a two-week standstill
agreement with Anthem that would prevent both sides from having
other deal talks.
(Reporting by Jennifer Saba in New York; Editing by Nick Zieminski
and Frances Kerry)
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