Aetna, Humana to consider all options after court blocks merger

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By Caroline Humer and Ankur Banerjee

<span class="articleLocation”>Jan 24 Aetna and Humana would
consider all available options for their proposed $34 billion
merger, the two U.S. health insurers said on Tuesday, a day
after a court ruled against the deal due to fears it would lower
competition.

The deal would “substantially lessen competition” in the
sale of Medicare Advantage plans in 364 counties in 21 U.S.
states and on the Obamacare exchange in three Florida counties,
the U.S. District Court for the District of Columbia ruled on
Monday.

“We continue to believe a combined company will create
access to higher-quality and more affordable care, and deliver a
better overall experience for those we serve,” Aetna Chief
Executive Officer Mark Bertolini and Humana Chief Executive
Offer Bruce Broussard said in a joint statement on Tuesday.

Aetna spokesman T.J. Crawford said on Monday that the
company was considering whether to appeal the court’s ruling.

Analysts, however, do not expect an appeal to be successful.

Leerink Partners analyst Ana Gupte said an appeal was
unlikely to pass muster under the Trump Administration.

“We see the new Trump Administration as focused on
deregulation and driving down prices through competitive
intensity in Medicare Advantage,” Gupte said in a client note.

The court ruling also casts doubt on Anthem Inc’s proposed $54 billion deal to buy fellow health insurer Cigna
Corp.

The U.S. Justice Department filed a lawsuit last July to
block the two deals, arguing they would lead to higher prices. A
court ruling on the Anthem-Cigna deal is pending.

Analysts believe it is unlikely that Humana would extend the
deadline to close the merger beyond the agreed date of Feb. 15.

Humana is among the top players in the profitable Medicare
Advantage business, which, Gupte said, could attract takeover
interest in the company from insurers including Cigna and
Anthem.

Aetna’s shares were down nearly 2 percent on Tuesday, while
Humana dropped 1.5 percent. Anthem and Cigna were up 0.7
percent. (Reporting by Caroline Humer in New York and Ankur Banerjee in
Bengaluru; Editing by Savio D’Souza)



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