Anthem CEO expects U.S. regulatory decision in July

Tue May 24, 2016 12:02pm EDT
 
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By Caroline Humer

NEW YORK (Reuters) - Anthem Inc (ANTM.N: Quote) Chief Executive Officer Joseph Swedish said on Tuesday the health insurer was pushing for approval from antitrust regulators reviewing its $51 billion acquisition of Cigna Corp (CI.N: Quote) and expects to hear a decision in July.

Anthem's bid for Cigna followed closely after Aetna Inc's (AET.N: Quote) proposed $34 billion purchase of Humana Inc (HUM.N: Quote) last July. The two transactions would reduce the U.S. health insurance market to three major players from five, raising questions about whether regulators scrutinizing the deals would approve both. Swedish said antitrust regulators have asked many questions about how it and Cigna manage healthcare benefits for large employers, but that the overall review was moving forward as expected.

Speaking at the UBS Global Healthcare Conference, Swedish said Anthem has argued to regulators that the deal will save consumers money as the combined company would be able to negotiate better prices for medical services.

Swedish expects the U.S. Department of Justice to make a determination on the deal in July. He spoke openly about the process after the Wall Street Journal reported there was heated correspondence between Anthem and Cigna lawyers working on the review. The company had previously declined to comment.

Anthem General Counsel Thomas Zielinski provided further detail, saying the company is due to meet with the Justice Department in July, when they expect to learn if the deal will be rejected, approved, or approved with remediations such as asset sales.

The company announced plans to buy Cigna nearly a year ago in a cash and stock deal worth about $54 billion at the time.

Anthem shares fell 1.9 percent, or $2.43, to $130.75 and Cigna shares were off 54 cents, or 0.4 percent, at $125.61 in Tuesday trading. Based on those share prices, the deal is worth $51 billion and values Cigna shares at $170.67.

In particular, investors have focused on doubts that large national customers support the deal, an issue that has turned federal antitrust regulators against other acquisitions it has reviewed this year and last year.   Continued...

 
The office building of health insurer Anthem in seen in Los Angeles, California February 5, 2015. REUTERS/Gus Ruelas