Cravath Advises Cigna on Deal With Anthem: Business of Law

Cravath, Swaine & Moore LLP is representing Cigna Corp. in a deal to be bought by rival Anthem Inc. for $48.4 billion.

The Cravath team is led by partners Erik R. Tavzel and Aaron M. Gruber, mergers and acquisitions; and includes partners Eric W. Hilfers, executive compensation and benefits; and Stephen L. Gordon, tax.

Cigna is represented in connection with the antitrust clearance on the transaction by Cadwalader, Wickersham & Taft LLP. The firm’s team includes partners Charles “Rick” Rule, Andrew Forman and Jonathan Kanter, and special counsel Daniel Howley.

White & Case LLP represented Anthem. Its team was led by merger-and-acquisition partners Dan Dufner and John Reiss. Also on the team were partners Eric Leicht and Dan Nam, banking; Bill Dantzler, tax; Henrik Patel, employment, compensation and benefits; and Rebecca Farrington and George Paul, antitrust.

Sidley Austin LLP was the insurance and health-care regulatory counsel for Cigna. Sidley’s team was led by partner Jonathan Kelly, insurance. Other members were partners Andrew Holland, insurance; Trevor Wear, health care; and Diane McEnroe, drug and medical-device regulatory.

Credit Suisse Group AG and UBS Group AG advised Anthem on the transaction, and Cigna got help from Morgan Stanley.

UBS is represented by Gibson, Dunn & Crutcher LLP, with a team led by partner Barbara Becker.

The agreement wraps up almost a year of contentious negotiations and potentially creates the largest health insurer in the U.S.

Anthem will pay $188 a share in cash and stock for Cigna, based on Anthem’s May 28 closing share price, the Indianapolis-based insurer said July 24 in a statement. The deal combines the second- and fourth-biggest insurers in the U.S., measured by members.

The acquisition extends a wave of consolidation sweeping over the health-care industry, potentially reducing the ranks of the biggest insurers from five to three, making it certain to attract antitrust scrutiny. President Barack Obama’s 2010 health-care overhaul is helping drive the mergers, in part by imposing tougher rules and limits on the industry’s profits.

Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem shares for each Cigna share. The combination will increase adjusted earnings per share by almost 10 percent in the first year, with the accretion more than doubling in the second year, Anthem said.

The companies said they plan to cut costs by about $2 billion in the first two years after the deal closes. The transaction, valued at $54.2 billion including debt, is expected to close in the second half of next year, pending regulatory approval.

Joseph Swedish, Anthem’s chief executive officer, will run the combined company, according to the statement.

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Court Appointments

Caesars Examiner Center Stage as Bond Suits Threaten Bankruptcy

The judge who handed a stinging defeat to Caesars Entertainment Operating Co. last week, with a ruling that the company must face creditor lawsuits, also may have solidified the importance of an examiner he appointed in March to the $20 billion bankruptcy case.

U.S. Bankruptcy Judge A. Benjamin Goldgar in Chicago appointed Richard Davis, a former Watergate prosecutor, to examine transactions and disputes at the heart of his July 22 ruling that allows creditors to pursue four suits filed against Caesars’ parent.

Davis will study their claims to see whether they’re warranted and report what he finds to Goldgar. The judge will consult those findings when deciding the bankruptcy’s main question: How much should Caesars Entertainment Corp. have to pay to help its insolvent unit out of bankruptcy?

An examiner’s main job is to be the neutral bearer of bad news, according to Howard Seife of Chadbourne & Parke LLP. Bankrupt companies and their hostile creditors don’t always welcome an examiner’s appointment, Seife said. Companies fear exposure of negative information that could be used against them, and creditors worry that an examiner won’t find anything to help recover more money.

“The tension is about who is going to control the narrative of the story and the investigation,” Seife said in an interview.

Davis’s first job out of Columbia Law School was as an assistant U.S. attorney in New York. In 1973, he joined the team that prosecuted crimes related to the Watergate scandal.

After two years in practice at Weil, Gotshal & Manges LLP, he served as an assistant secretary of the U.S. Treasury, where he helped track down and seize Iranian assets. He returned to Weil Gotshal in 1981 and stayed until 2012, rising to general counsel.

As the in-house lawyer at Weil, Davis gained plenty of experience bearing ill tidings. His job required him to offer a blunt view of whatever legal problem the firm faced, even when things looked bad.

Davis, 69, may have to adopt the same manner in the Caesars bankruptcy, where he’s charged with delivering a report that may cost one or more of the warring groups billions of dollars.

He has been asked to look into property transfers and a debt refinancing that Caesars made before putting the operating unit into bankruptcy in January. He will advise Goldgar on whether any of the transactions could be overturned to the benefit of particular creditor groups.

Caesars and the official committee of unsecured creditors differ on how wide-ranging Davis’s investigation should be. Goldgar set Monday as the deadline for briefing on the scope of the probe.

Davis declined to comment on the Caesars case or his appointment as examiner.

The case is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).

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