Cigna Rejects Anthem Bid...Who's Next?

Cigna Corporation CI is likely to ultimately accept a takeover bid by Anthem Inc ANTM, according to a couple of analysts Monday.

Anthem's $47 billion cash-and-stock offer was initially rejected by Cigna on Sunday.

But Susquehanna's Chris Rigg said Cigna won't prevail in its demands for both a high take-out premium and that Cigna Chief Executive David Cordani continue in his role at the combined companies.

"It's hard to picture a scenario where Anthem's efforts aren't successful," according to Rigg, who said Cigna directors would face substantial "fiduciary and reputational risks" if they ultimately reject Anthem's overture.

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Cinga's rejection "reads to us more like a company looking to get comfort on a few issues" than outright disregard, Bank of America's Kevin Fischbeck said.

In its initial rejection, Cigna cited concerns about Anthem's "lack of a growth strategy," a current anti-trust suit against Blue Cross Blue Shield of which Anthem is a member, and "risks" around having Anthem's CEO Joseph Swedish head the combined companies.

But Fischbeck noted that Cigna also said a merger under more favorable terms would result in "immediate and sustainable economic returns to shareholders."

If Cigna sought to stave off Anthem's bid by making a run for Humana Inc HUM, Rigg said activists holding Cigna shares would block the purchase on the assumption that a better deal from Anthem is available.

Lacking outside bids from either UnitedHealth Group Inc. UNH or Aetna Inc AET, Cigna's "options are limited," Rigg said.

Cigna gained more than 7 percent before the bell Monday, trading at $166.85; Anthem was trading at $169, up more than 2 percent.