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Feds seek letters between Anthem, Cigna IBJ .pdf

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Feds seek letters allegedly showing disputes between
Anthem, Cigna
Bloomberg News
September 25, 2016
Anthem Inc. and Cigna Corp. are refusing to provide letters between the two insurers that the U.S. government
contends will show that they get along so poorly that they wouldn’t be able to effectively merge.
In federal court papers filed Thursday, Indianapolis­based Anthem said that Department of Justice prosecutors
seeking to block the deal shouldn’t have access to letters between Anthem and Cigna’s lawyers where they
disagree about aspects of the $48 billion takeover by Anthem.
“Seeking to air defendants’ disputes in the hopes of fomenting a breakdown of the merger without judicial
review, or seeking to peer into defendants’ legal strategy, are not legitimate bases” for seeing messages that
Anthem said on Thursday are privileged communications.
A day earlier, the Justice Department filed a motion seeking to compel the companies to produce the
correspondence. The U.S. has sued to block the merger on antitrust grounds, and argued in the Wednesday filing
that “hostility between the plaintiffs could hamper integration efforts.”
Anthem said disagreements won’t stop them from doing business together. “Adversity does not destroy
defendants’ common interest,” Anthem said in the court papers.
Bigger synergies
In fact, the deal with Cigna will save even more than originally predicted, Anthem said. In the filing, Anthem
said the companies would have annual synergies of $2.6 billion to $3.4 billion, compared with the about $2
billion the companies predicted when they announced the transaction in July 2015.
By combining, they’ll be able to get better rates from doctors and hospitals, Anthem said.
“Generally, Cigna’s provider rates are higher than Anthem’s in areas where both operate, due to Cigna’s smaller
enrollment,” Anthem said in the court papers. “Cigna’s customers stand to benefit from Anthem’s superior cost
position.” The synergies will also include new products and growing numbers of customers, Anthem said.
Cigna spokesman Matthew Asensio declined to comment, as did Jill Becher, a representative for Anthem.
Company disagreements
On Wednesday, the Justice Department said that in­house attorneys for the companies had exchanged letters last
month alleging each violated the deal’s terms.
“Governance disputes between defendants have escalated, and the firms are now accusing each other of
breaching the merger agreement,” the U.S. said in the filing. “Because the breach letters reveal the current state

of hostility between defendants, the letters evince barriers to integrating these firms and are relevant” to one of
the defenses raised by the companies.
Tensions between Anthem and Cigna have been evident since before the Justice Department sued the companies
in July to stop the merger, which it says would reduce competition and reduce choice for consumers. At a court
hearing in August, an Anthem lawyer said there is “contentiousness” with Cigna and that Cigna intends to walk
away from the deal after an April 30 deadline for closing the deal rather than extend the timing.
The government lawsuit is scheduled to go to trial on Nov. 21.

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