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Cigna warns merger with Anthem could fail

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Cigna warns merger with Anthem could fail

cast doubt on itsability to finalize its planned merger with Anthem Inc. following a federal lawsuit against the deal, saying in a July 21 statementthat the "earliest it could close is 2017, if at all."

Thehealth insurer originally anticipated that it would complete the multibillion-dollarmerger in the second half of 2016. But the tie-up ran into skepticism from bothfederal and state officials over its antitrust implications, culminating in aJustice Department lawsuit aimed at blocking the deal. Nine states and the Districtof Columbia have also joined the suit as plaintiffs against Anthem and Cigna.That prompted Cigna to warn that the deal might end up falling apart.

"Giventhe nature of the concerns raised by the DOJ and the overall status of theregulatory process, which under the terms of the merger agreement was led byAnthem, Cigna is currently evaluating its options consistent with itsobligations under the agreement," the company said.

Cignacould collect a $1.85billion termination fee if the merger is blocked or if it is not completed byJan. 31, 2017, though that deadline could be extended to April 30, 2017.

Cigna'smuted response came in sharp contrast to Anthem's reaction to the lawsuit. TheIndiana-based insurer in a separate statement called the legal action"unfortunate and misguided" and said it was "based on a flawedanalysis and misunderstanding of the dynamic, competitive and highly regulatedhealthcare landscape."

WhileAnthem pledged to challenge the Justice Department's decision to try to blockthe merger, it also opened the door to some kind of settlement that would allowit to complete the deal.

Thefederal government also sued AetnaInc. and HumanaInc. over their own planned merger, similarly alleging that it would harmcompetition. The health insurers in a joint statement said they would"vigorously defend" their deal.