By Anna Wilde Mathews

Anthem Inc. on Thursday appealed a federal judge's decision to block its acquisition of Cigna Corp., but the future of the deal was unclear amid discord between the two partners.

On Wednesday, U.S. District Judge Amy Berman Jackson said the proposed $48 billion deal between the two health insurers violated federal antitrust law because it would create an unacceptable reduction in the number of companies able to serve large multistate employers that offer insurance to their workers.

A Cigna spokesman declined to comment on the appeal beyond an earlier statement that said thecompany "intends to carefully review the opinion and evaluate its options in accordance with the merger agreement."

Cigna previously appeared to question whether Anthem had the right to unilaterally extend their merger agreement to April 30, which Anthem said it did in January. In a filing last week, Cigna said it had "made no determination with respect to Anthem's notice seeking to extend the termination date, including whether Cigna will seek to terminate the merger agreement, and has informed Anthem that it is reserving all of its rights in this regard."

Anthem will face long odds in attempting to get an appeal done by April 30, and it still needs state approvals to close the deal.

The merger agreement calls for Cigna to receive a $1.85 billion breakup fee from Anthem if the deal dies, and analysts have suggested that the two companies would likely be headed toward a new chapter of hostilities in the event of a negative antitrust decision.

In a statement, Anthem Chief Executive Joseph R. Swedish said the company was "significantly disappointed by the decision as combining Anthem and Cigna would positively impact the health and well-being of millions of Americans," and it "will continue to work aggressively to complete the transaction."

The judge's ruling said the combination "is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms' vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market."

The decision also highlighted the obvious signs of disagreement between Anthem and Cigna, which had originally announced their combination amid an industry merger frenzy in 2015.

The companies squabbled during the Justice Department's review of the transaction and eventually accused each other of violating the merger agreement.

During trial proceedings that began in November, Anthem mounted a legal defense of the merger single-handedly. Cigna lawyers said very little during the proceedings, and when they did, it usually didn't help Anthem's position. Judge Jackson in her ruling called the rift "the elephant in the courtroom."

"Anthem urges the court to look away, and it attempts to minimize the merging parties' differences as a 'side issue,' a mere 'rift between the CEOs.' But the court cannot properly ignore the remarkable circumstances that have unfolded both before and during the trial," the judge wrote.

According to the two companies' merger agreement, the deal's termination date "may be extended by Anthem or Cigna, by written notice to the other party, to a date not later than April 30, 2017."

The agreement says Anthem will have to pay the $1.85 billion if the deal is blocked on regulatory grounds, but only once a decision has become "final and non-appealable." The agreement also says the fee won't be owed if the regulatory failure comes because of "Cigna's willful breach of its obligations to complete the mergers."

The agreement says that the right to terminate the deal "shall not be available to any party that has failed to perform fully its obligations under this agreement in any manner that shall have proximately caused or resulted in the failure of the merger to have been consummated."

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

February 09, 2017 18:34 ET (23:34 GMT)

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