The proposed marriage of Anthem and Signa hasn't hasn't exactly been true love. It was supposed to be a forty eight billion dollar deal that would create the largest US health insurer. Instead, it produced two court decisions blocking the acquisition and prompted the companies to to accuse one another of harassment and sabotage. The merger may or may not
be dead, but the legal fight is sure alive. Last week, Anthem asked the Supreme Court to intervene, saying a federal appeals court used outdated economics and ruling against the deal. And today the two companies are appearing in state court in Delaware, where Anthem is trying to stop Signa from withdrawing from the agreement with US. To sort all this out is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst. Jennifer,
thanks as always for joining us. So usually when you have companies that are trying to to merge and an I trust enforcers block a deal, your suit of block a deal in the federal court, UH says yes, I'm going to block the deal. The companies give up, they walk away. Why has this deal been different than that? That's a really good question. Uh, it's a little bit hard to understand in some ways anthem strategy here, UM, But yes, that's usually the case. They they don't usually
go quite this far. And I think that here, you know, Anthem obviously feels very strongly about its efficiencies argument, which is a different efficiencies argument, I think than is usually made in a merger case, more more complicated than usual.
And by saying that, UM, I should go back and say that that efficiencies based on the guidelines that the government uses to weigh mergers and whether or not they violate antitrust laws, they are supposed to take into account efficiencies that could be generated by the merger that might offset anti competitive effects that could occur via the merger, and if those efficiencies could offset those effects and outweigh
those effects, the merger doesn't violate antitrust laws. And I think Anthem believes they have a strong argument here that that is the case. Obviously, the district court rejected that position, um,
as did the appellate court. And they also have a situation where they have to pay an almost two billion or break up for failure to getting antitrust clearance, well two billion dollars jen that could have something, Yes, their desire to keep litigating this, but um, you know, it's hard to get the Supreme Court to hear a case even if you think the lower court is wrong. And you know, very few surgery reputations are actually granted by the court. Their doc is relatively small as a percentage
of the number of cases that people ask them to hear. Why, you know, what is Anthem's hook here? What do they what? What is it that they are trying to argue will be really persuasive to get the court to here the case?
You know, I think they're trying to argue that there was a misapplication of the law and and and that the Supreme Court precedent as it stands on mergers and particularly the application of efficiencies in the analysis, is outdated and doesn't align with the actual thought process or the or the way that that the circuit courts have ruled
that mergers should be looked at today, you know. And the thing is, it could be an interesting argument for the Supreme Court, but I don't really believe that that's what happened here in the district court and the appellate decision. I think that's how they're trying to to, you know, cast it in order to get the Supreme Court to pick it up. But Michael, I, I just I'm gonna say it. Maybe I'll be wrong, but I don't see the Supreme Court picking up this case. Well, it would
certainly be interesting if they did. The Supreme Court hasn't ruled in a merger case since I believe in nineteen seventy four, so it would certainly be an area of the law that they haven't addressed in a while. UM Gent, let me turn to what's going on in Delaware today. There's a proceeding before I judge there right now. Just explain to us what is what is happening there, what
what the companies are are each seeking. Sure, so, what happened here is that UM Anthem had the ability at one point in time to extend the termination date in the merger agreement to April thirty. I don't remember what the date that was triggered. I think it might have been February and um they had the unilateral ability to
do that. They didn't need signals, okay on that, And before that happened, SIGNA actually tried to enjoin them, tried to get a declaratory action that they that they Anthem had breached the agreement and could therefore not trigger that extension date that April thirty date. And the Court said, no, that's not the case. They can trigger it, and they went ahead and did it. And the court also enjoined SIGNA from terminating the agreement, you know, before April thirty.
Now that date has passed, they are still enjoined. So today I believe that there is a hearing where they're going to decide. The court will decide um or listen to arguments as to whether that temporary injunction temporary restraining order should be lifted and whether or not Signal should be able to terminate this agreement. Well, what, you know, what are the consequences here? Because one with one could see an argument that, well, look, what's the big deal.
The Supreme Court is going to hear the case, just keep the injunction going. But it's not quite so simple for SIGNA if the injunction stays in effect, right, absolutely, right?
I think what really complicates things here certainly we might know, we might know if the Supreme Court is going to pick this case up, let's say, by October or just after October but what really complicates things is that companies that are being acquired when they're in this period of limbo as a mergers being considered definitely suffer harm to the market. You know, I'm sure Signa has an argument here that it's difficult to renew contracts, that they lose customers,
they perhaps might even lose employees. And it's already been in limbo for almost two years, so you know, it's no easy decision to just say, Hey, the court's going to decide in October whether to pick this up, let's just keep this thing enjoined, and let's just you know, keep Signa in limbo here. Not to mention the fact that even if the court picks it up, you need to hear it, you need a decision, and there's a good chance to the Supreme Court would demand the case
to distrect court. So we're talking a few years, not just October, Jennifer. There's been so much rancor between the two companies in in this deal, I mean, really a remarkable level of accusations going each direction. If somehow this deal could go through, um, is this a company that would be uh sort of you know, permanently scarred a combined company that would be scarred by by all that went into this this uh legal fight. Well, you know,
it's hard to say. I think that if it did go through and they emerged it with their performance would have to bear out what they say it would be. I mean, the district court judge certainly felt that the rancor would affect their ability to integrate and their ability to achieve some of the efficiencies they argued they could achieve.
But if they actually did merge and they were able to achieve those efficient efficiencies, lower costs for their large company customers as well as let's say, what what's considered the signa more innovative, better product, Well, then I suppose the marketplace would would accept that and be happy with that. Well, Jenn, you have to take us through a bit. You know. Let's say somehow they managed to persuade the court to take the case. The court prints of back and the
kid puts it back together. Uh, it goes through. You know, what is Anthem really saying the benefits are of doing
this merger. What Anthem is saying is that the customers that the district Court claimed would be harmed by this merger were the large customers, customers that have employees in several states across the country, sort of coast to coast, even if they're out in every state that might use that would use Anthem or signa UM as their administrative services claims administrator that they're fully ensured, like Bloomberg for example, But would you would use these companies to administer these
to negotiate provider rates and then there they pay those provider rates for their employees. And Anthem is claiming that it would be able to lower those provider rates and it would be an immediate pass through to its customers like Bloomberg because their employee, you know, Bloomberg, is then
reimbursing lower rates. I want to thank our guest, Jennifer Rees, Senior Analysts, senior litigation analyst at Bloomberg Intelligence, walking us through the many aspects of the Anthem Signa merger and the legal fight over that