Cigna Rejects Anthem's $54 Bln. Takeover Bid

(RTTNews) - Health insurer Cigna Corp (CI) on Sunday rejected bigger rival Anthem Inc (ANTM)'s $54 billion takeover offer, stating that the proposal is inadequate and not in the best interests of its shareholders.

Cigna said it was concerned over Anthem's lack of growth strategy, fundamental risks and other issues facing the company.

According to Cigna, its strategy to operate as an independent company has resulted in strong growth in revenues in the past five years and its stock price has perceptibly increased. But such momentum was lacking in Anthem stock, the company said.

Cigna said it is concerned over major issues Anthem facing Anthem, including lack of a growth strategy, complications relating to membership in the Blue Cross Blue Shield Association and the related antitrust actions, and other significant challenges, such as the massive data breach Anthem experienced in February.

Cigna also said differences over the leadership of the combined company is disconcerting and risky. A main stumbling block has been over the future role that Cigna's Chief Executive Officer David Cordani will have in the combined company.

Anthem insists that its CEO Joseph Swedish would lead the combined company for two years, and Cordani would be president and chief operating officer. After that, Cordani would be a candidate for CEO position, but that is not guaranteed.

Cigna said Anthem's inability to address the aforesaid issues in the context of a strategic combination is a key reason for its rejecting the offer.

Cigna said it continues to focus on maximizing shareholder value and creating differentiated value for its customers, clients and other stakeholders in a dynamic, rapidly-evolving healthcare environment.

On Saturday, Anthem offered a non-binding proposal to buy Cigna for $184 per share in cash and stock, valuing the company at $53.8 billion on an enterprise basis.

Since August, Anthem has been seeking a deal for Cigna had already submitted three bids this month, starting at $174 per share. On Saturday, Anthem went going public with its offer of $184 per share.

Meanwhile, Cigna has been reportedly pursuing a deal of its own for Humana Inc (HUM). Among others in the industry, UnitedHealth has been reported to have approached Aetna Inc (AET) for a merger.

The merger moves reflect the dynamics underlying the health insurance industry. Companies are seeking to consolidate to better take advantage of rising revenues from the Affordable Care Act and the growing privatization of Medicare and Medicaid.