Aetna will become the nation's second largest health insurer as it announces a deal to buy Kentucky-based Humana.
Aetna will become the nation’s second largest health insurer as it announces a deal to buy Kentucky-based Humana. The $37 billion dollar deal will significantly increase Aetna’s presence in the market for government plans like Medicare Advantage, which offers privately-run versions of Medicare plans.
The offer price values Humana at about $230 a share, a 23 percent premium to its stock price close last night.
Aetna CEO Mark Bertolini issued a statement saying, “the acquisition of Humana aligns two great companies and will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry.”
Bertolini will remain as CEO of the combined company, and the headquarters for its government plan businesses, Medicare, Medicaid and TRICARE, will be in Louisville, Kentucky.
Aetna says it remains committed to its own government business and it intends to retain the best of both teams currently working on those plans, but there’s no firm commitment on whether there may be job losses as the two companies are merged. The deal must be approved both by federal regulators and by Connecticut’s own insurance department, and it’s the type of consolidation that might well throw up anti-trust concerns. The deal isn’t expected to close until mid-2016.
The merger now throws the spotlight on the fate of fellow Connecticut insurer Cigna. Cigna had hoped to be the successful bidder for Humana, but Aetna’s announcement now leaves the Bloomfield insurer vulnerable to another bid from Anthem.
