US: Cigna rejects $47 billion Anthem bid

Cigna on Sunday rejected Anthem $47 billion takeover bid, saying it was inadequate. Anthem on Saturday offered to buy the smaller health insurer in what would be the biggest industry takeover ever in the US.

Insurers such as Anthem are searching for ways to cut costs and keep expanding profits amid a surge in enrollment from the Affordable Care Act. Cigna said its rival was “facing a number of major issues,” including a lack of a growth strategy, its membership in the Blue Cross Blue Shield Association, and related antitrust actions. Cigna also cited a data breach at Anthem in February. Its proposal is for $184 a share, about 31 percent of which would be paid in Anthem shares and the rest in cash. That’s a 29 percent premium to Cigna’s average closing price in the past 20 trading sessions.

Anthem said Saturday that the total transaction value is $53.8 billion, including net debt. The merged entity would serve about 53 million members. Anthem said it offered to name Cigna’s chief executive, David Cordani, as president and chief operating officer of the combined entity, as well as cochairman of the integration team. But Cigna insisted on Cordani’s remaining as CEO, Anthem said. On Sunday, Cigna said Anthem’s proposal that its CEO, Joseph Swedish, take on four roles including chairman and president, is “disconcerting and risky.”

Full content: Bloomberg

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