Anthem chief denies Cigna deal in jeopardy

Anthem (ANTM) CEO Joseph Swedish denies reports his firm and Cigna (CI) have been at loggerheads in their attempt to gain approval from the Department of Justice for their $54 billion merger.

"The reality is the process is working very well," Swedish said, speaking at a panel at the UBS Global Healthcare conference in New York City. "The two teams are working extremely well together. We're meeting deadlines on all the submittals."

On Sunday, a report in The Wall Street Journal said a series of letters showed the Cigna and Anthem officials are squabbling and accusing each other of missing deadlines on DOJ requests for documents.

An earlier report in the New York Post suggested regulators were not convinced the companies had made a strong enough case that the $2 billion in savings achieved through the merger would actually benefit consumers. That report cited unnamed DOJ officials.

"I think we will get a determination from the DOJ in the not too distant future," Swedish said, expressing confidence the deal will be approved.

Hospitals and doctors' groups have opposed megainsurance mergers, and have been particularly vocal about the Anthem-Cigna deal because Anthem is already the nation's largest Blue Cross operator and the deal could increase the Blue Cross network's dominance.

Others have raised concerns that the combination of the two companies will reduce competition and result in higher prices in the national market for employer-based insurance.

"I still feel very comfortable that we'll be able to demonstrate that there is not a national market for national accounts," Anthem general counsel Tom Zielinski said at the UBS panel.

He added that the deal wouldn't be scuttled if the company were required to make divestitures.

"If I have to get there, I do believe there are ways that we could construct a remediation plan ... that the DOJ would be comfortable with," Zielinski said.

Anthem and Cigna's march toward a merger has been contentious from the beginning. Nearly a year ago, Cigna laid bare the conflicts that arose in their negotiations, saying the complexities of the deal would make it hard to win regulatory approval. Anthem later disclosed that one of the biggest points of contention was who would lead the combined company; Cigna CEO David Cordani wanted assurances that he would succeed Swedish as chief executive.

Centene (CNC) CEO Michael Neidorff said he expects Swedish and Cordani to find a way to resolve their differences as they had previously in order to reach their merger agreement.

"They're both smart people and I think as they move through this, they'll work it out and they'll able to structure the deal," Neidorff said in an interview at the UBS Global Healthcare Conference. "At some point, cool minds have to prevail."

Stifel analyst Thomas Carroll said he expects Centene and its Medicaid-focused rivals Molina Health (MOH) and Wellcare (WCG) could become attractive acquisition targets for Anthem and Cigna if their own deal falls apart.

"Both Anthem and Cigna would likely rethink their product portfolios as they look to maintain relevance in the market and with investors," Carroll wrote in a research note.

Neidorff said he's more interested in being an acquirer and growing the company's footprint.

"It's something we haven't thought about," he said. "I'm more concerned with delivering earnings and growth to our shareholders, and it's pretty hard to match our growth."

Correction: An earlier version of this story attributed certain remarks to Anthem's chief financial officer. The comments were made by the firm's chief legal counsel Tom Zielinski.

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