Unlock the Editor’s Digest totally free
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Cigna is in talks to merge with Humana in a deal that might create a US medical insurance large value $140bn and supply a big check for antitrust authorities, in line with folks briefed concerning the matter.
The 2 firms have employed advisers who’ve been discussing a money and inventory deal for greater than a month. They hope to get the transaction agreed earlier than the tip of the 12 months, the folks stated.
A mixture between Cigna and Humana would assist the businesses compete with bigger rivals reminiscent of UnitedHealth Group and Elevance Well being, previously referred to as Anthem. It might additionally mark the biggest deal of the 12 months between two firms with a mixed enterprise worth of about $140bn, together with debt, in what has in any other case been a tepid mergers and acquisitions setting.
Cigna shares fell 8.1 per cent whereas these of Humana dropped 5.5 per cent. The Wall Avenue Journal first reported the discussions on Wednesday.
A possible deal would come amid a tricky antitrust setting, notably for bigger transactions and people within the healthcare sector. Each firms have beforehand had offers blocked. A federal choose dominated in 2017 {that a} merger between Humana and Aetna was anti-competitive, adopted by an identical determination weeks in a while a tie-up between Anthem and Cigna.
Cigna was contemplating promoting some current property to pre-empt any authorized pushback from US regulators, stated one particular person briefed concerning the matter.
If the deal to mix Humana and Cigna went via it could nonetheless be smaller than the biggest participant, UnitedHealth Group, which has a market worth near $500bn. UnitedHealth generated revenues of $322bn in 2022, whereas Humana and Cigna collectively made about $263bn.
The US healthcare system is separated into a whole lot of for-profit firms which might be below growing stress to chop prices, which has spurred consolidation within the sector. CVS Well being, the biggest pharmacy chain within the US, in 2018 acquired Aetna for $69bn and Cigna mixed with Specific Scripts in a $67bn deal, together with debt.
A spokesperson for Humana declined to touch upon the deal talks. Representatives for Cigna didn’t return a number of requests for remark.