Cigna 2015 Annual Report Download - page 144

PART II
ITEM 8. Financial Statements and Supplementary Data
Company recorded a charge of $77 million before-tax ($51 million the merger agreement inappropriately favor Anthem and inhibit
after-tax) in the first quarter of 2013 related to this matter. The competing bids. Plaintiffs seek, among other things, injunctive relief
Company is actively addressing the requirements of the agreement. If enjoining the merger, rescission of the merger agreement to the extent
the monitoring states find material non-compliance with the already implemented, and costs and damages.
agreement upon re-examination, the Company may be subject to Effective November 24, 2015, solely to avoid the costs, risks and
additional costs and penalties. uncertainties inherent in litigation, and without admitting any
liability or wrongdoing, the Company, the Company’s directors,
Other Legal Matters
Anthem and Merger Sub entered into a Memorandum of
Understanding (‘‘MOU’’) to settle the Cigna Merger Litigation.
Following announcement of the Company’s merger agreement with
Subject to court approval and further definitive documentation in a
Anthem as discussed in Note 3, six putative class action complaints
settlement agreement that will be subject to customary conditions, the
(collectively the ‘‘complaints’’ or ‘‘Cigna Merger Litigation’’) were filed
MOU resolved the Cigna Merger Litigation and provided that the
by purported Cigna shareholders on behalf of a purported class of
Company would make certain additional disclosures related to the
Cigna shareholders. Five of the complaints were filed in the Court of
merger. If the Court approves the settlement, the Cigna Merger
Chancery of the State of Delaware. The sixth complaint was filed in
Litigation will be dismissed with prejudice and all claims that were or
the Connecticut Superior Court, Judicial District of Hartford.
could have been brought in any actions challenging any aspect of the
Additional lawsuits arising out of or relating to the merger agreement
merger, the merger agreement and any related disclosures will be
or the merger may be filed in the future.
released. In connection with the settlement, subject to the ultimate
Cigna, members of the Cigna board of directors, Anthem and determination of the Court, plaintiffs’ counsel may receive an award
Anthem Merger Sub Corp (‘‘Merger Sub’’) have been named as of reasonable fees. There can be no assurance that the parties will
defendants. The plaintiffs generally assert that the members of the ultimately enter into a settlement agreement, or that the Court will
Cigna board of directors breached their fiduciary duties to the Cigna approve the settlement even if the parties were to enter into such
shareholders during merger negotiations and by entering into the agreement. The MOU may terminate, if, among other reasons, the
merger agreement and approving the merger, and that Cigna, Anthem Court does not approve the settlement or the merger is not
and Merger Sub aided and abetted such breaches of fiduciary duties. consummated for any reason. Following entry into the MOU, the five
The allegations include, among other things, that (1) the merger complaints filed in Delaware were voluntarily dismissed with
consideration undervalues Cigna, (2) the sales process leading up to prejudice.
the merger was flawed due to purported conflicts of interest of
members of the Cigna board of directors and (3) certain provisions of
114 CIGNA CORPORATION - 2015 Form 10-K