US insurer Cigna rejects €41bn takeover approach
Cigna Corp has rejected Anthem's $47bn (€41bn) takeover bid, saying it was inadequate, not in the best interests of shareholders and that Anthem's management wasn't fit to lead a merged insurance giant.
Last Saturday Anthem offered to buy the smaller health insurer in what would be the biggest takeover ever in a US industry on the verge of major consolidation. Insurers such as Anthem are searching for ways to cut costs and keep expanding profits amid a surge in enrolment from Obamacare and new rules from the law.
Unlike the drug industry, where big pharmaceutical manufacturers have gobbled up smaller biotechnology companies, Anthem and Cigna are well-established companies with their own strategies. That means that while there will be takeovers, they won't happen without a struggle.
A major sticking point between Anthem and Cigna is who would lead a combined company. Anthem chief executive officer Joseph Swedish wants to stay in control for two years. Cigna CEO David Cordani says Anthem hasn't sorted out its growth strategy and Swedish hasn't been able to handle problems at the insurer, like a large data breach by hackers in February. Cordani and Chairman Isaiah Harris Jr also questioned whether the deal could pass antitrust scrutiny.
As a result, Cigna's board "unanimously determined the proposal is inadequate and not in the best interests of Cigna's shareholders," Cordani and Harris wrote in a letter to Anthem on Sunday.
Anthem yesterday reiterated its commitment to completing a transaction. Its non-binding proposal is for $184 a share, a 29pc premium to Cigna's average closing price in the past 20 trading sessions. (Bloomberg)