By Jonathan D. Rockoff And Dana Cimilluca
Anthem Inc. boosted its takeover offer for Cigna Corp. and is
going public with the bid after the two sides failed to reach
agreement, the latest move in a frenzy of attempted mergers among
health insurers.
Anthem has offered $184 a share for Cigna in cash and stock, or
$54 billion including debt, according to a person familiar with the
matter. Anthem is making the offer public in an effort to put
pressure on Cigna through its shareholders.
Anthem's pursuit of Cigna comes as Cigna itself is eyeing Humana
Inc., which has put itself up for sale. UnitedHealth Group Inc.,
meanwhile, recently made a takeover approach to Aetna Inc., which
is also pursuing Humana. The five big managed-care companies are
jockeying for deals that will enable them to get more efficient and
better respond to changes in the health care landscape in the U.S.
brought on by the Affordable Care Act and other developments.
Analysts says it is likely regulators will only allow one or two
such combinations.
Anthem made a number of bids for Cigna privately in June,
according to a letter Anthem Chief Executive Joseph Swedish sent to
Cigna's board Saturday that was seen by The Wall Street Journal.
Among other things, the letter details disagreement the two sides
have over the role Cigna CEO David Cordani would play in a combined
company. He wants to be CEO, if not immediately then after a period
of time, which Anthem refuses to guarantee.
The Journal had reported earlier this week that Anthem was
pursuing Cigna, and had bid about $175 a share, which was rejected,
and that Mr. Cordani's potential role was a sticking point.
Anthem's bid consists of about 31% of its own shares and the
rest in cash. About 76% of the combined company would be owned by
Anthem shareholders, while Cigna investors would own the rest,
according to the latest proposal.
Anthem, which said it has been in negotiations with Cigna since
Aug. 2014, bemoaned what it called its rival's refusal to
"reasonably negotiate." It said the governance demands Cigna is
making are excessive, given the rich premium Anthem says it is
offering. Cigna is seeking a nearly 50-50 split of directors on a
combined company's board, Anthem said. Cigna also pushed for an
offer price split evenly between cash and stock, according to
Anthem.
A Cigna official declined to comment.
Anthem said it submitted four bids in June, the most recent, of
$184 a share, on Thursday.
Cigna shares closed Friday at $155.30, giving the company a
market value of $40 billion.
Anna Wide Mathews contributed to this article.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Dana Cimilluca at dana.cimilluca@wsj.com
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