Anthem Raises Offer for Cigna to $54 Billion -- Update

By Jonathan D. Rockoff And Dana Cimilluca 

Anthem Inc. boosted its takeover offer for Cigna Corp. and is going public with the bid after the two sides failed to reach agreement, the latest move in a frenzy of attempted mergers among health insurers.

Anthem has offered $184 a share for Cigna in cash and stock, or $54 billion including debt, according to a person familiar with the matter. Anthem is making the offer public in an effort to put pressure on Cigna through its shareholders.

Anthem's pursuit of Cigna comes as Cigna itself is eyeing Humana Inc., which has put itself up for sale. UnitedHealth Group Inc., meanwhile, recently made a takeover approach to Aetna Inc., which is also pursuing Humana. The five big managed-care companies are jockeying for deals that will enable them to get more efficient and better respond to changes in the health care landscape in the U.S. brought on by the Affordable Care Act and other developments.

Analysts says it is likely regulators will only allow one or two such combinations.

Anthem made a number of bids for Cigna privately in June, according to a letter Anthem Chief Executive Joseph Swedish sent to Cigna's board Saturday that was seen by The Wall Street Journal. Among other things, the letter details disagreement the two sides have over the role Cigna CEO David Cordani would play in a combined company. He wants to be CEO, if not immediately then after a period of time, which Anthem refuses to guarantee.

The Journal had reported earlier this week that Anthem was pursuing Cigna, and had bid about $175 a share, which was rejected, and that Mr. Cordani's potential role was a sticking point.

Anthem's bid consists of about 31% of its own shares and the rest in cash. About 76% of the combined company would be owned by Anthem shareholders, while Cigna investors would own the rest, according to the latest proposal.

Anthem, which said it has been in negotiations with Cigna since Aug. 2014, bemoaned what it called its rival's refusal to "reasonably negotiate." It said the governance demands Cigna is making are excessive, given the rich premium Anthem says it is offering. Cigna is seeking a nearly 50-50 split of directors on a combined company's board, Anthem said. Cigna also pushed for an offer price split evenly between cash and stock, according to Anthem.

A Cigna official declined to comment.

Anthem said it submitted four bids in June, the most recent, of $184 a share, on Thursday.

Cigna shares closed Friday at $155.30, giving the company a market value of $40 billion.

Anna Wide Mathews contributed to this article.

Write to Jonathan D. Rockoff at [e-mail] and Dana Cimilluca at [e-mail]

Access Investor Kit for Aetna, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US00817Y1082

Access Investor Kit for Cigna Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1255091092

Access Investor Kit for Humana, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US4448591028

Access Investor Kit for UnitedHealth Group, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US91324P1021

Subscribe to WSJ: http://online.wsj.com?mod=djnwires