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Aetna, Humana Call Off $34 Billion Courtship in Bad Start to Valentine's Day
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On Tuesday, health insurance giants Aetna and Humana (HUM - Free Report) announced that they have called off their merger agreement after a federal court decision struck down the deal as anticompetitive.
Both Aetna and Humana said the decision was mutual. "We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations," said Aetna CEO Mark Bertolini in a statement.
Aetna, as required in the original deal, will pay Humana $1 billion to end the merger, or $630 million after taxes.
Aetna is the nation’s third largest insurer, and announced its bid for Humana, the fifth largest insurer, back in 2015. A federal ruled in January the $34 billion merger was not in the best interest of consumers, and sided with allegations brought on by the U.S. Department of Justice that the combined company would simply have too much power. In particular, too much power in the business of providing senior citizens Medicare coverage through Advantage plans.
The Aetna-Humana deal isn’t the only health insurer deal in the works. Rivals Anthem and Cigna (CI - Free Report) are pursuing their own merger, worth $48 billion. Like its peers, a federal judge ruled against this deal on antitrust grounds as well, but Anthem announced just last week that it would appeal the ruling. In a statement after the ruling, Anthem CEO Joseph Swedish said the company "will continue to work aggressively to complete the transaction."
Currently, AET is a Zacks Rank #3 (Hold), and is down 1.58% year-to-date. HUM is also a #3 (Hold) on the Zacks Rank, and is up 1.31% year-to-date.
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Aetna, Humana Call Off $34 Billion Courtship in Bad Start to Valentine's Day
On Tuesday, health insurance giants Aetna and Humana (HUM - Free Report) announced that they have called off their merger agreement after a federal court decision struck down the deal as anticompetitive.
Both Aetna and Humana said the decision was mutual. "We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations," said Aetna CEO Mark Bertolini in a statement.
Aetna, as required in the original deal, will pay Humana $1 billion to end the merger, or $630 million after taxes.
Aetna is the nation’s third largest insurer, and announced its bid for Humana, the fifth largest insurer, back in 2015. A federal ruled in January the $34 billion merger was not in the best interest of consumers, and sided with allegations brought on by the U.S. Department of Justice that the combined company would simply have too much power. In particular, too much power in the business of providing senior citizens Medicare coverage through Advantage plans.
The Aetna-Humana deal isn’t the only health insurer deal in the works. Rivals Anthem and Cigna (CI - Free Report) are pursuing their own merger, worth $48 billion. Like its peers, a federal judge ruled against this deal on antitrust grounds as well, but Anthem announced just last week that it would appeal the ruling. In a statement after the ruling, Anthem CEO Joseph Swedish said the company "will continue to work aggressively to complete the transaction."
Currently, AET is a Zacks Rank #3 (Hold), and is down 1.58% year-to-date. HUM is also a #3 (Hold) on the Zacks Rank, and is up 1.31% year-to-date.
Which Stocks are Zacks Experts Talking About?
Stocks in today's headlines may be tempting buys, but how would you like a sneak peek at the stocks Zacks experts recommend? Starting today, for the next month, you can follow all of Zacks' private buys and sells in real time. You can track value and momentum stocks, ETFs, stocks under $10, options moves, insider trades, and stocks set to report positive earnings surprises (we've called them with 80%+ accuracy). Click here for all Zacks trades >>