Aetna’s offer would value its smaller rival at about $230 per share, the people said, asking not to be identified as the information is private.
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Representatives of the companies met in recent days to discuss a potential combination, as stated by a source quoted by the paper, with a deal possible this month.
A takeover approach for Humana earlier this year thrust the biggest health-insurance companies into a five-way merger frenzy. As mentioned by reports, UnitedHealth could be observing Cigna and Aetna.
At the end of June, Cigna rejected a United States dollars 54 billion buyout offer by rival Anthem as part of efforts by insurance companies to increase their size as a means of obtaining stronger negotiating positions with health care providers. Known as Obamacare, the 2010 law overhauled the USA health-care system with new rules that push insurers to look for savings. Insurers are eager to reduce expenses and build scale that will help them face off against health-care providers that are bulking up. But many of these health care providers also have been growing and gaining their own leverage.
Health insurer Aetna, Inc.
Shares of Aetna and Humana closed at $125.51 and $187.50, respectively on Thursday.
What began as a chain of nursing homes and hospital acquisitions has become a different business through a series of changes.
The combined company will cover more than 33million people.
The combined company would be based in Hartford, Conn., led by Aetna Chairman and CEO Mark Bertolini and cover more than 33 million people.
While a lack of options on the exchanges may be worrying, health insurers see several advantages to combining. The combination also would bolster Aetna’s presence in the state- and federally funded Medicaid program and Tricare coverage for military personnel and their families.
Humana also has struggled with its business on the health law’s marketplaces.
Merger talks in the industry have picked up as companies seek to better benefit from the Affordable Care Act, and to cut costs. The amounts made public so far aren’t complete yet, however.
The acquisition deal is happening at a time when the industry has seen many consolidations taking place.
Humana, based in Louisville, Kentucky, has been under pressure for more than a year from investors, which include activist fund Glenview Capital Management, to produce higher returns. It would also dwarf Anthem Inc’s purchase of WellPoint in 2004 for $16.6 billion. It’s Louisville’s second-largest employer.
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Others have said it is unclear that this group of regulators will stick to the usual review playbook for such a large deal and may add other restrictions. Instead, it seems more likely that it will be Aetna that makes the winning bid; if so, Humana would significantly expand Aetna’s Medicare footprint. Longtime ex- Humana CEO Michael B.
