Aetna, Humana ditch US$37b merger blocked by US judge

A trader points up at a display on the floor of the New York Stock Exchange August 20, 2012. — Reuters pic
A trader points up at a display on the floor of the New York Stock Exchange August 20, 2012. — Reuters pic

NEW YORK, Feb 14 — Aetna Inc ended its US$37 billion (RM164.5 billion) takeover of Humana Inc, after deciding not to appeal a ruling by a federal judge who blocked the deal on antitrust grounds.

The health insurers came to a mutual agreement to terminate their merger, Aetna said in a statement today. Aetna will pay Humana a US$1 billion breakup fee.

The companies are now free to make new deals or buy back billions of dollars of their own shares. Aetna agreed to acquire Humana in July 2015, and the US sued to block the takeover about a year later.

A federal judge blocked the deal on January 23, siding with Justice Department lawyers who said that allowing the insurers to combine would harm competition, mainly in the market for Medicare Advantage plans. Aetna and Humana had agreed to divest some assets to Molina Healthcare Inc, but the judge rejected that remedy. That deal was also cancelled today.

Their deadline to complete the deal or agree to extend it while they appealed was February 15.

Aetna said in late January that it expects earnings, excluding certain items, to climb at least 10 per cent this year to US$8.55 a share, even if it can’t complete the Humana deal. Humana said last week that it would give its outlook for this year by February 16.

Another massive health insurance deal, meanwhile, is grinding forward — for now. Anthem Inc yesterday said that it’s seeking a fast-track appeal of a different judge’s ruling blocking its proposed US$48 billion acquisition of Cigna Corp. The company is seeking a ruling before an April 30 merger deadline. — Bloomberg

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