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Speaker 1: The proposed marriage of Anthem and Signa hasn't hasn't exactly

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Speaker 1: been true love. It was supposed to be a forty

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Speaker 1: eight billion dollar deal that would create the largest US

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Speaker 1: health insurer. Instead, it produced two court decisions blocking the

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Speaker 1: acquisition and prompted the companies to to accuse one another

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Speaker 1: of harassment and sabotage. The merger may or may not

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Speaker 1: be dead, but the legal fight is sure alive. Last week,

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Speaker 1: Anthem asked the Supreme Court to intervene, saying a federal

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Speaker 1: appeals court used outdated economics and ruling against the deal.

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Speaker 1: And today the two companies are appearing in state court

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Speaker 1: in Delaware, where Anthem is trying to stop Signa from

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Speaker 1: withdrawing from the agreement with US. To sort all this

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Speaker 1: out is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst. Jennifer,

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Speaker 1: thanks as always for joining us. So usually when you

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Speaker 1: have companies that are trying to to merge and an

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Speaker 1: I trust enforcers block a deal, your suit of block

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Speaker 1: a deal in the federal court, UH says yes, I'm

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Speaker 1: going to block the deal. The companies give up, they

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Speaker 1: walk away. Why has this deal been different than that?

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Speaker 1: That's a really good question. Uh, it's a little bit

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Speaker 1: hard to understand in some ways anthem strategy here, UM,

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Speaker 1: But yes, that's usually the case. They they don't usually

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Speaker 1: go quite this far. And I think that here, you know,

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Speaker 1: Anthem obviously feels very strongly about its efficiencies argument, which

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Speaker 1: is a different efficiencies argument, I think than is usually

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Speaker 1: made in a merger case, more more complicated than usual.

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Speaker 1: And by saying that, UM, I should go back and

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Speaker 1: say that that efficiencies based on the guidelines that the

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Speaker 1: government uses to weigh mergers and whether or not they

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Speaker 1: violate antitrust laws, they are supposed to take into account

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Speaker 1: efficiencies that could be generated by the merger that might

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Speaker 1: offset anti competitive effects that could occur via the merger,

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Speaker 1: and if those efficiencies could offset those effects and outweigh

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Speaker 1: those effects, the merger doesn't violate antitrust laws. And I

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Speaker 1: think Anthem believes they have a strong argument here that

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Speaker 1: that is the case. Obviously, the district court rejected that position, um,

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Speaker 1: as did the appellate court. And they also have a

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Speaker 1: situation where they have to pay an almost two billion

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Speaker 1: or break up for failure to getting antitrust clearance, well

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Speaker 1: two billion dollars jen that could have something, Yes, their

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Speaker 1: desire to keep litigating this, but um, you know, it's

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Speaker 1: hard to get the Supreme Court to hear a case

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Speaker 1: even if you think the lower court is wrong. And

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Speaker 1: you know, very few surgery reputations are actually granted by

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Speaker 1: the court. Their doc is relatively small as a percentage

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Speaker 1: of the number of cases that people ask them to hear. Why,

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Speaker 1: you know, what is Anthem's hook here? What do they what?

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Speaker 1: What is it that they are trying to argue will

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Speaker 1: be really persuasive to get the court to here the case?

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Speaker 1: You know, I think they're trying to argue that there

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Speaker 1: was a misapplication of the law and and and that

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Speaker 1: the Supreme Court precedent as it stands on mergers and

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Speaker 1: particularly the application of efficiencies in the analysis, is outdated

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Speaker 1: and doesn't align with the actual thought process or the

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Speaker 1: or the way that that the circuit courts have ruled

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Speaker 1: that mergers should be looked at today, you know. And

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Speaker 1: the thing is, it could be an interesting argument for

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Speaker 1: the Supreme Court, but I don't really believe that that's

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Speaker 1: what happened here in the district court and the appellate decision.

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Speaker 1: I think that's how they're trying to to, you know,

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Speaker 1: cast it in order to get the Supreme Court to

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Speaker 1: pick it up. But Michael, I, I just I'm gonna

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Speaker 1: say it. Maybe I'll be wrong, but I don't see

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Speaker 1: the Supreme Court picking up this case. Well, it would

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Speaker 1: certainly be interesting if they did. The Supreme Court hasn't

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Speaker 1: ruled in a merger case since I believe in nineteen

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Speaker 1: seventy four, so it would certainly be an area of

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Speaker 1: the law that they haven't addressed in a while. UM Gent,

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Speaker 1: let me turn to what's going on in Delaware today.

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Speaker 1: There's a proceeding before I judge there right now. Just

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Speaker 1: explain to us what is what is happening there, what

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Speaker 1: what the companies are are each seeking. Sure, so, what

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Speaker 1: happened here is that UM Anthem had the ability at

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Speaker 1: one point in time to extend the termination date in

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Speaker 1: the merger agreement to April thirty. I don't remember what

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Speaker 1: the date that was triggered. I think it might have

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Speaker 1: been February and um they had the unilateral ability to

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Speaker 1: do that. They didn't need signals, okay on that, And

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Speaker 1: before that happened, SIGNA actually tried to enjoin them, tried

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Speaker 1: to get a declaratory action that they that they Anthem

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Speaker 1: had breached the agreement and could therefore not trigger that

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Speaker 1: extension date that April thirty date. And the Court said, no,

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Speaker 1: that's not the case. They can trigger it, and they

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Speaker 1: went ahead and did it. And the court also enjoined

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Speaker 1: SIGNA from terminating the agreement, you know, before April thirty.

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Speaker 1: Now that date has passed, they are still enjoined. So

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Speaker 1: today I believe that there is a hearing where they're

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Speaker 1: going to decide. The court will decide um or listen

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Speaker 1: to arguments as to whether that temporary injunction temporary restraining

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Speaker 1: order should be lifted and whether or not Signal should

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Speaker 1: be able to terminate this agreement. Well, what, you know,

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Speaker 1: what are the consequences here? Because one with one could

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Speaker 1: see an argument that, well, look, what's the big deal.

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Speaker 1: The Supreme Court is going to hear the case, just

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Speaker 1: keep the injunction going. But it's not quite so simple

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Speaker 1: for SIGNA if the injunction stays in effect, right, absolutely, right?

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Speaker 1: I think what really complicates things here certainly we might know,

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Speaker 1: we might know if the Supreme Court is going to

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Speaker 1: pick this case up, let's say, by October or just

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Speaker 1: after October but what really complicates things is that companies

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Speaker 1: that are being acquired when they're in this period of

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Speaker 1: limbo as a mergers being considered definitely suffer harm to

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Speaker 1: the market. You know, I'm sure Signa has an argument

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Speaker 1: here that it's difficult to renew contracts, that they lose customers,

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Speaker 1: they perhaps might even lose employees. And it's already been

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Speaker 1: in limbo for almost two years, so you know, it's

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Speaker 1: no easy decision to just say, Hey, the court's going

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Speaker 1: to decide in October whether to pick this up, let's

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Speaker 1: just keep this thing enjoined, and let's just you know,

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Speaker 1: keep Signa in limbo here. Not to mention the fact

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Speaker 1: that even if the court picks it up, you need

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Speaker 1: to hear it, you need a decision, and there's a

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Speaker 1: good chance to the Supreme Court would demand the case

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Speaker 1: to distrect court. So we're talking a few years, not

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Speaker 1: just October, Jennifer. There's been so much rancor between the

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Speaker 1: two companies in in this deal, I mean, really a

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Speaker 1: remarkable level of accusations going each direction. If somehow this

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Speaker 1: deal could go through, um, is this a company that

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Speaker 1: would be uh sort of you know, permanently scarred a

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Speaker 1: combined company that would be scarred by by all that

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Speaker 1: went into this this uh legal fight. Well, you know,

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Speaker 1: it's hard to say. I think that if it did

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Speaker 1: go through and they emerged it with their performance would

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Speaker 1: have to bear out what they say it would be.

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Speaker 1: I mean, the district court judge certainly felt that the

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Speaker 1: rancor would affect their ability to integrate and their ability

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Speaker 1: to achieve some of the efficiencies they argued they could achieve.

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Speaker 1: But if they actually did merge and they were able

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Speaker 1: to achieve those efficient efficiencies, lower costs for their large

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Speaker 1: company customers as well as let's say, what what's considered

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Speaker 1: the signa more innovative, better product, Well, then I suppose

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Speaker 1: the marketplace would would accept that and be happy with that. Well, Jenn,

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Speaker 1: you have to take us through a bit. You know.

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Speaker 1: Let's say somehow they managed to persuade the court to

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Speaker 1: take the case. The court prints of back and the

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Speaker 1: kid puts it back together. Uh, it goes through. You know,

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Speaker 1: what is Anthem really saying the benefits are of doing

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Speaker 1: this merger. What Anthem is saying is that the customers

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Speaker 1: that the district Court claimed would be harmed by this

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Speaker 1: merger were the large customers, customers that have employees in

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Speaker 1: several states across the country, sort of coast to coast,

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Speaker 1: even if they're out in every state that might use

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Speaker 1: that would use Anthem or signa UM as their administrative

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Speaker 1: services claims administrator that they're fully ensured, like Bloomberg for example,

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Speaker 1: But would you would use these companies to administer these

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Speaker 1: to negotiate provider rates and then there they pay those

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Speaker 1: provider rates for their employees. And Anthem is claiming that

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Speaker 1: it would be able to lower those provider rates and

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Speaker 1: it would be an immediate pass through to its customers

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Speaker 1: like Bloomberg because their employee, you know, Bloomberg, is then

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Speaker 1: reimbursing lower rates. I want to thank our guest, Jennifer Rees,

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Speaker 1: Senior Analysts, senior litigation analyst at Bloomberg Intelligence, walking us

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Speaker 1: through the many aspects of the Anthem Signa merger and

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Speaker 1: the legal fight over that