Shares of Cigna and Humana faced declines following reports of merger talks between the two health-care giants. The discussions involve a stock-and-cash deal that may be finalized by the end of the year. While a Cigna spokesperson has not commented on the matter, a Humana spokesperson declined to provide a statement. The potential merger, if it materializes, would be a significant deal, given that Cigna’s market value is approximately $77 billion, and Humana’s is nearly $60 billion, making them among the largest health insurers in the United States. Cigna’s shares closed 8% lower, while Humana’s stock closed more than 5% lower.
Earlier this month, there were reports that Cigna was exploring the sale of its Medicare Advantage business, which manages government health insurance for individuals aged 65 and older. While a Cigna spokesperson did not provide specific comments on the rumors, some analysts suggest that a potential merger with Humana could be a motivating factor for Cigna to divest its Medicare Advantage business. This move could potentially address antitrust concerns associated with the merger. Scott Fidel, a health care stock analyst at Stephens, noted that divesting this business could be a proactive step to reduce antitrust risk in the pursuit of Humana as an acquisition target.
The talks between Cigna and Humana indicate ongoing consolidation trends within the health-care industry, where major players seek strategic partnerships and mergers to enhance their market position and competitiveness. However, the finalization of any deal remains subject to regulatory approval and other considerations. The potential merger underscores the dynamic nature of the health-care landscape, where companies are exploring various avenues to navigate industry challenges and capitalize on emerging opportunities.
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