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Speaker 1: A federal judge has blocked anthems forty eight billion dollar

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Speaker 1: deal to buy Signa, the second of two massive mergers

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Speaker 1: that would have reshaped the US healthcare landscape. Two weeks ago,

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Speaker 1: another judge halted Etna's seven billion dollar merger with Humanum.

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Speaker 1: Judge Amy Jackson said the merger of Anthem and Signa

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Speaker 1: was likely to result in higher prices and would have

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Speaker 1: done unacceptable harm to competition in the industry. Joining us

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Speaker 1: as Bloomberg Intelligence senior litigation analyst Jennifer ree Jen was

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Speaker 1: this expected. Good afternoon, June and Gregg, thanks for having me.

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Speaker 1: And June, Yes, I do think it was. I mean,

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Speaker 1: I think looking at what happened in trial and the

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Speaker 1: arguments that the companies were making, as well as the

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Speaker 1: block on the attempt to acquire Humanita by Etna that

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Speaker 1: occurred just last month, um, you know, and and so

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Speaker 1: much concern right now about costs and rising costs in healthcare,

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Speaker 1: and and what a sense of the issue that is,

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Speaker 1: I think this wasn't a big surprise. Jennifer. There's this

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Speaker 1: really interesting little aspect about this case where there was

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Speaker 1: this discord between Anthem and Signa tell us a little

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Speaker 1: bit about that and how much if it all played

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Speaker 1: into the judge's decision. You know, it really was an

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Speaker 1: interesting aspect because usually parties to a merger are on

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Speaker 1: the same page, you know, they're both trying to reach

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Speaker 1: the same end goal and they're working towards that together.

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Speaker 1: And in this case, it was just very odd because

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Speaker 1: in some circumstances in the trial it seemed that SIGNA

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Speaker 1: was disagreeing openly with Anthem, in fact, disagreeing with Anthem's

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Speaker 1: estimated of cost savings that might come from the merger,

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Speaker 1: you know, as well as being unwilling to sign onto

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Speaker 1: Anthem's version of the proposed facts and findings that came

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Speaker 1: out at the trial um because they disagreed. And that

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Speaker 1: is really very strange, and you know, it's possible Anthem

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Speaker 1: might claim that this was part of the problem and

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Speaker 1: why they got blocked. When I read the judge's summary,

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Speaker 1: now she hasn't issued her full opinion yet, but she

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Speaker 1: did issue a summary. I don't really feel like it

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Speaker 1: did play in too much. I mean, she does mention it,

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Speaker 1: she does call it the elephant in the room, and

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Speaker 1: it was an issue, but she determined that this merger

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Speaker 1: was anti competitive and it would cause harm to a

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Speaker 1: market based on properly defined markets. And she determined that

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Speaker 1: the efficiencies were not merger specific and not verifiable, and

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Speaker 1: that enough we would would would block this deal. That

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Speaker 1: would be enough to have a ruling to block the

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Speaker 1: deal even without this this discord that made the efficiencies

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Speaker 1: that were claimed questionable. Jen Jeff Sessions was just sworn

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Speaker 1: in as Attorney General this morning. Could anthem and signa

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Speaker 1: remake these deals and try again under the Trump administration

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Speaker 1: where perhaps the antitrust officials would be more amenable to

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Speaker 1: large consolidations. You know, June, good question, because I think

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Speaker 1: that's what a lot of people are wondering and thinking about.

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Speaker 1: And in some cases my reaction to that would be

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Speaker 1: it would be worth to try, because traditionally the Republican

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Speaker 1: approach has been to be a little friendlier, a little

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Speaker 1: more pro business. But the one thing I will say

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Speaker 1: about this is that something that's been quite bipartisan, even

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Speaker 1: within you know, the advent of the Trump administration is

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Speaker 1: this concern over cost pharmaceutical costs and healthcare costs. And

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Speaker 1: because of that, I suspect this kind of deal involving

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Speaker 1: to health insurers would probably have the same fate even

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Speaker 1: with the new administration, Jennet, is there any prospect of

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Speaker 1: litigation between Anthem and Signa over the discord that that

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Speaker 1: you were talking about. I know that there's a provision

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Speaker 1: in their merger agreement that uh, um, I'm going to

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Speaker 1: get them confused here, but one of them have to

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Speaker 1: pay the other one off the deal falls apart, right

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Speaker 1: right right. It's called a reverse breakup fee. And if

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Speaker 1: the deal falls apart before the end date that it's

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Speaker 1: blocked because of antitrust. The way it works is the

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Speaker 1: buyer would have to pay the seller the fee, which

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Speaker 1: in this case is one point eight billion. That's a

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Speaker 1: negotiated term during the time that they're negotiating and agreeing

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Speaker 1: upon a purchase agreement. Um. And it would surprise me

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Speaker 1: if Anthem didn't try to fight that fee. I mean

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Speaker 1: that this was a strange deal where they it seems

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Speaker 1: that there was some evidence they were already accusing each

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Speaker 1: other of breach of contract even before this got to trial.

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Speaker 1: Then there was the discord at trial and it looks,

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Speaker 1: you know, they're they're clearly not on the same page,

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Speaker 1: and I you know, it's a very long agreement there

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Speaker 1: are a lot of conditions on that fee, and I

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Speaker 1: imagine that Anthem will try to challenge it and claim

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Speaker 1: that SIGNA didn't satisfy its conditions, or that it will

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Speaker 1: fully breached the contract, which could also put that THEE

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Speaker 1: in jeopardy. And who says anti trust is not fascinating.

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Speaker 1: Anthem said it will appeal, and and you man I

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Speaker 1: have said they're still deciding whether to appeal. What are

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Speaker 1: the chances on appeal? I think I think for both

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Speaker 1: the chances are probably low. You know, first, it's a

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Speaker 1: high standard to start and um, you know both judges opinions. Well,

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Speaker 1: again we haven't seen the full opinion by Judge Jackson,

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Speaker 1: but at least the ETNA opinion was really really well

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Speaker 1: thought out, in thorough and decisive. And I have a feeling,

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Speaker 1: based on the summery here, this one will be too.

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Speaker 1: And I think the likelihood on appeal is low. You know,

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Speaker 1: we have very little precedent to, let's say, look at

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Speaker 1: statistics on these matters, because so few mergers go to

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Speaker 1: trial and so few that are actually lost by the

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Speaker 1: parties get appealed. Thank you so much for being with

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Speaker 1: us here on Bloomberg Law. That's Bloomberg Intelligence senior litigation

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Speaker 1: analyst Jennifer Ree. For more of Jennifer's analysis, go to

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Speaker 1: b I go on the Bloomberg terminal. That's it for

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Speaker 1: this edition of Bloomberg Law. We'll be back tomorrow one

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Speaker 1: pm Wall Street Time, and hope you will be as well.

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Speaker 1: Thanks to our technical director Chris try Comey and our

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Speaker 1: producer David Suckerman. You can always find the latest legal

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Speaker 1: news at Bloomberg Law dot com and Bloomberg na dot com.

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Speaker 1: Bloomberg Markets with Carol Masser and Corey Johnson starts right

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Speaker 1: now on Bloomberg Radio. Carol is in the studio to

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Speaker 1: tell us what's up next. Well, good afternoon, June, Good afternoon,

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Speaker 1: everybody coming up. We've got to take a look at Twitter.

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Speaker 1: We got their earnings after the closed yesterday, but we're

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Speaker 1: seeing that stock tumbling, so we'll walk you through the

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Speaker 1: quarter you need to know as an investor. Also going

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Speaker 1: to talk about the President's meeting with airline executives. He's

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Speaker 1: talked about a little bit about tax policy, so that's

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Speaker 1: got people excited. June on this South Thursday, hard to

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Speaker 1: imagine about Twitter. We'll be listening. That's Bloomberg Markets with

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Speaker 1: Carol Masser and Corey Johnson, starting right now on Bloomberg Radio.

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Speaker 1: This is Bloomberg