Biotech
Monday, December 11th, 2023 3:13 pm EDT
Key Points
- Cigna Abandons Plans to Acquire Humana: Cigna’s stock experienced a nearly 14% surge following reports that the healthcare giant has decided to abandon its plans to acquire rival Humana due to disagreements on price. This move puts an early end to what would have been one of the largest deals of the decade, creating a healthcare conglomerate with a value exceeding $140 billion.
- Share Buyback Plans and Market Response: Cigna, in response to the scrapped deal, announced plans to buy back $10 billion worth of shares, bringing the total planned repurchases to $11.3 billion. This strategic move contributed to the positive market response, with Cigna’s stock surging while Humana’s stock remained flat. The buyback plan was seen as a favorable action for value-sensitive Cigna investors.
- Analyst Outlook and Antitrust Scrutiny: Jefferies analyst David Windley upgraded Cigna’s shares to buy from hold, considering the abandoned Humana deal as a “short-term win” for Cigna investors. The inability of Cigna and Humana to agree on price and financial terms for the deal would likely have attracted intense antitrust scrutiny. Despite the setback, Cigna reportedly believes in the merits of a potential tie-up with Humana, focusing on enhancing access to care and reducing costs for consumers.
Healthcare giant Cigna’s stock surged nearly 14% following reports that it has abandoned plans to acquire rival Humana due to disagreements on price. The proposed deal, valued at over $140 billion, would have created a significant healthcare conglomerate, attracting potential antitrust scrutiny. Cigna also announced a $10 billion share buyback plan, bringing the total planned repurchases to $11.3 billion. While Cigna did not confirm the reports about abandoning the Humana pursuit, analysts believe this move is a “short-term win” for Cigna investors, and the company continues to see merit in a potential tie-up with Humana, focusing on improving access to care and reducing costs for consumers. Jefferies analyst David Windley upgraded Cigna’s shares, emphasizing that the stock buyback plan is favorable to value-sensitive shareholders. The decision to scrap the deal follows a sharp decline in the companies’ stock prices after initial reports of merger discussions in late November, raising concerns about antitrust implications. Despite the setback, Cigna remains open to smaller acquisitions and maintains its commitment to enhancing healthcare access and affordability.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/11/cigna-shares-jump-on-abandoned-humana-buyout-buyback-plans.html
