The failed merger between Anthem and Cigna led to a ton of litigation in both federal and Delaware courts. As the saga winds towards its conclusion, there remained a suit in which both sides are suing the other for breaching covenants requiring each "to take all reasonable steps to consummate the Merger (the “Reasonable Best Efforts Covenant”) and to take “any and all actions” necessary to avoid impediments to the Merger from government entities (the “Regulatory Efforts Covenant”)."
The Delaware Business Litigation Report has a lengthy post on the case, describing the complex background and the issues involved. They key finding is that:
Cigna breached the Efforts Covenants, the Court held that the burden then shifted to Cigna to prove that, even if Cigna had met its obligations under the Efforts Covenants, a condition to closing – the No Injunction Condition—still would have failed. The Court ruled that Cigna had proved, in part based on the opinions of two of its experts, that the District Court would have concluded, and the Circuit Court would have affirmed, that the effect of the Merger on the market for the sale of commercial insurance to national accounts violated the anti-trust laws regardless of Cigna’s breaches and thus would have enjoined the Merger. The Court held, therefore, that Cigna had proved that it was more likely than not, that Cigna’s breaches of the Efforts Covenants would not have affected those courts acting to enjoin the Merger. For that reason, the Court held that, notwithstanding Anthem’s proof of Cigna’s violations of the Efforts Covenants, Anthem was entitled to no damages.
I plan to put this case aside for discussion in the next edition of my M&A casebook and treatise.
