Ex-Anthem CEO Says Leadership Dispute Led to War With Cigna
(Bloomberg) -- A proposal to relegate Cigna Corp.’s top executive to a reduced role following a merger with Anthem Inc. inflamed an all-out war between the two companies, Anthem’s former chief executive testified in a Delaware trial over the deal’s collapse.
After agreeing to Anthem’s proposed $49 billion buyout, Cigna’s chief executive officer, David Cordani, stopped cooperating with efforts to win antitrust approval for the deal after learning he wouldn’t lead the company, said Joseph Swedish, who stepped down as Anthem’s top executive in 2017. Anthem has cited the lack of cooperation as a reason the merger was never finalized.
“We are truly at war,’’ Swedish said in a 2016 memo after Cigna’s directors rejected his proposed leadership plan for the merged company. Swedish was slated to be the entity’s chief executive while Cordani was to be president and chief operating officer.
The merger imploded a year later when a judge found it was anticompetitive, and now Cigna and Anthem are battling in Delaware Chancery Court over whether one owes the other billions in damages for the deal’s collapse. Cordani is expected to testify next.
Cigna is seeking more than $16 billion in damages and termination fees. Anthem, which runs Blue Cross and Blue Shield plans in more than a dozen states, claims it’s owed $20 billion.
Cordani sabotaged the deal by refusing to turn over crucial information that could’ve persuaded the U.S. Department of Justice the deal provided value to employers and workers who’d be covered by the health plans, according to Anthem officials. Cigna countered that Anthem botched getting antitrust clearance and used the proposed merger to hurt one of its rivals.
When Swedish presented his organizational plan for the combined entity to Cigna officials at a 2016 healthcare conference, he’d pegged Cordani to oversee the insurer’s projected $56 billion commercial business. His colleague was less than pleased with the assignment, Swedish recalled.
“Mr Cordani said we had nothing else to talk about and got up and left the room,’’ Swedish told Judge Travis Laster. After that meeting, “there was literally no engagement with me, basically. All communications between us’’ ceased, Swedish said.
At one point, Swedish asked some of his subordinates, “Who the hell does he think he is?’’ according to an email introduced into evidence. Swedish said he was referring to Cordani.
The relationship between the two executives deteriorated to the point that Swedish said he doubted he could ever work with Cordani, whom he described as “piggish and insecure.’’
Swedish said in an internal memo that he’d accommodate Cordani until the deal closed, but “there can be no future for him and, by definition, his loyalists.’’
During cross-examination, Swedish said he’d been warned by colleagues that Cordani had maneuvered to oust executives who’d been over him at Cigna. The CEO said he didn’t want the “past to be prologue’’ and had no intentions of being replaced by Cordani.
The case is In Re Anthem-Cigna Merger Litigation, 2017-0114, Delaware Chancery Court (Wilmington).
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