The health insurance stakes just got bigger as Cigna (NYSE: CI) scorned a $47 billion dollar takeover bid by competitor Anthem (NYSE: ANTM). According to Cigna, the terms were weighed too much in favor of Anthem’s shareholders.
If successful, the takeover would have made Anthem an even bigger force to contend within an industry that needs to see some serious consolidation in the months ahead. Up against a slew of regulations, as well as technological advances, the combined might of Cigna and Anthem would have meant revenues in excess of $115 billion. Cornering 53 million individuals in the market would also give the new entity significant heft.
Bidding the takeover goodbye?
Cigna came up with a sharp retort after Anthem declared it would give a meager 18% up on Cigna’s closing stock price for the day with a cash and stock offer that worked out to approximately $184 per share. Top officials at Cigna including CEO David Cordani and Chairman of the Board, Isaiah Harris Jr., put in writing their deep disappointment and listed some of the many factors that were proving to be problems in the deal.
Officials at Cigna seem unwilling to open up about the possibility of reopening talks after this failed bid. While remaining tight-lipped on what could tip things in Anthem’s favor, Cigna acknowledged that such a deal could bring a lot of benefits for investors as well to consumers and doctors.
Cigna had, among other things, sought clarity from Anthem on some regulatory angles as well as the strategic intent of the health insurer. Earlier this year, Anthem experienced a major breach in their customer data stores, leaving them vulnerable. Cigna stock has also done better than the larger player Anthem’s, something Cigna attributes to Anthem’s lack of a clear growth strategy.
What also remains under the scanner is the role David Cordani will take on in the new scenario. Under the current plan tabled by Anthem, their CEO, Joseph Swedish will don multiple hats as President, CEO, Chairman as well as the Head of Integration, of the combine. It is something that not surprisingly, is a bugbear for Cordani in the terms of the bid.
It has been a while now since talks have been underway and this latest attempt marks the fifth bid by Anthem. Only time will tell if Anthem will come up short or make it sixth time lucky.